ACCT 2230 Chapter Notes - Chapter 2: Opportunity Cost, Income Statement

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azurecrow744

17 Dec 2011

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Document Summary

Manufacturing costs: 3 broad categories: direct materials: the materials that go into final product are often called raw materials. Raw materials may be used to refer to any materials used in final product the finished product of one company could be raw materials of another company. Indirect materials: small items of material (eg. blue, nails). May become essential part of finished product but are traceable to the product only at great cost or inconvenience: direct labour: also called touch labour since workers typically touch the product while its being made. Indirect labour: labour costs that cant be physically traced to the creation of products (or not easily/ conveniently) eg. Janitors, supervisors, materials handlers etc: manufacturing overhead: all costs associated w/ manufacturing except direct materials & direct overhead. This includes indirect materials & indirect labour, maintenance, property tax (costs to operate factory) * manufacturing overhead costs average 17% of sales revenue. Conversation cost = direct labour costs manufacturing overhead costs.

Related Questions

Choose the correct answer for the below -

Both direct materials and indirect materials are:

1.Merchandise inventory

2.Period costs

3.Raw materials

4.Manufacturing overhead

violetclam834

Case 3-49

Avid Assemblers uses normal job-order costing to assign costs toproducts. The company assembles and packages 25 different productsaccording to customer specifications. Products are worked on inbatches of 20 to 40 units. Each batch is given a job number. OnOctober 1, the company had the following balances:

Raw materials		$9,800
Work in process		65,847
Finished goods		30,640

Work in process consisted of the following jobs:

	Job 22	Job 24	Job 25
Direct materials	$6,200	$5,190	$4,800
Direct labour	10,500	9,210	9,500
Applied overhead	7,350	6,447	6,650
Total	$24,050	$20,847	$20,950
Number of units	20	40	30

Finished goods consisted of Job 23, with the following costs:

		Job 23
Direct materials		$8,200
Direct labour		13,200
Applied overhead		9,240
Total		$30,640
Number of units		50

Shown below are the direct cost data related to jobs started inOctober:

	Job 26	Job 27	Job 28	Total
Direct materials	$5,180	$5,600	$4,200	$14,980
Direct labour	11,200	9,340	5,910	26,450
Number of units	20	30	20

Other information:

Direct materials and direct labour added tobeginning work in process in October were as follows:

	Job 22	Job 24	Job 25	Total
Direct materials	$1,150	$610	$1,500	$3,260
Direct labour	3,000	4,500	5,500	$13,000

Overhead is applied at a predetermined rate basedon the direct labour cost.

Actual expenses for October were as follows:

Supervisory salaries	$6,000	Supplies (factory)	$2,100
Factory rent	5,000	Selling expenses	8,500
Depreciation (machines)	5,000	Property tax and insurance	2,250
Indirect labour	4,000	CPP, EI, and other benefits*	4,200