MGT223H5 Study Guide - Midterm Guide: Fixed Cost, Variable Cost, Cost Driver
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What is the difference between total manufacturing costs incurred and the cost of goods manufactured? (4 marks) The three major elements of product costs in a manufacturing company are direct materials, direct labour, and manufacturing overhead. Prime costs consist of direct materials and direct labour. Conversion costs consist of manufacturing overhead and direct labour. Total manufacturing costs are the total costs of direct materials, direct labour and manufacturing overhead incurred in the current period for products that are both complete and partially complete at the end of the period. Cost of goods manufactured represents the direct materials, direct labour and manufacturing overhead costs for goods completed during the period. What type of costs should not be assigned to products in an activity-based costing system and why? (7 marks) Unit-level activities are performed for each unit that is produced. For example (e. g. ), providing power to run processing equipment.
