ACCT 2230 Chapter 2: Managerial Accounting Chapter Two Notes
14 Jan 2012
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Chapter two cost terms, concepts, and classifications y general cost classifications: manufacturing costs. manufacturing companies divide manufacturing costs into three broad categories: direct materials, direct labour, and manufacturing overhead. These items may become an integral part of a finished product but are traceable to the product only at great cost or inconvenience. direct labour y direct labour is those factory labour costs that can be traced easily to individual units of products. manufacturing overhead y manufacturing overhead includes all costs of manufacturing except direct materials and direct labour. This term stems from the fact that direct labour costs and overhead costs are incurred to convert materials into finished products. y direct labour combined with direct materials is called prime cost: classification of labour costs of manufacturing. overtime premiums represent the extra hourly wage rate paid to production workers who must work above their normal time requirements: non-manufacturing costs.
