ACC 410 Chapter : Accounting Textbook Chapter Notes 5,8,10,11.docx
19 Apr 2012
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Product costs are costs involved in either making/purchasing a product, and they are called manufacturing/inventoriable costs; they are the direct/indirect costs of producing g/s. Period costs are the operating costs that are not part of making/purchasing a product such as sales/administrative expenses. Direct materials/labour combined referred to as prime cost and direct labour and manufacturing overhead combined referred to as conversion cost, reflecting the fact that these 2 costs convert materials into finished goods. *cost of goods sold (cogs) = beginning merchandise inventory + purchases ending. *cogs = beginning finished goods inventory + cog manufacturing ending finished. Process costing allocates both direct/overhead costs to continuous-flow processing lines; it is the approach generally used for mass-produced products. When a customer with specific product/service requirements places an order, we call the order a job and when a client brings his tax records to an accountant, the accounting firm considers this order a job. Job costing process of assigning products to custom products/services.
