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[33:010:275] - Final Exam Guide - Comprehensive Notes fot the exam (25 pages long!)


Department
Accounting
Course Code
33:010:275
Professor
S A V I T A S A H A Y
Study Guide
Final

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Rutgers
33:010:275
FINAL EXAM
STUDY GUIDE

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1/30/17
Lecture 2 Chapter 2 Continued
1. 3 Types of Firms
Manufacturing-sector companies purchase materials and components and convert
them into finished products
Ex) Ford, Apple, Pizza Hut
Merchandising-sector companies purchase and then sell tangible products without
changing their basic form
Ex) Target, Barnes and Noble, Macys
Service-sector companies provide services (intangible products)
Ex) Yahoo, Gold Gym, Citi Bank
2. Manufacturing Costs
The Product = Direct Materials, Direct Labor, Manufacturing Overhead
Manufacturing overhead anything required in manufacturing but not the first two;
3. Product Costs (inventoriable costs or Manufacturing Costs)
Direct Costs direct materials and direct labor
Indirect Costs indirect materials, indirect labors, other manufacturing overheads
- Indirect materials materials used to support the production process
EX) cleaning supplies
- Indirect labor costs ages paid to eployees ho are’t diretly ioled i
production work
EX) maintenance workers, janitors, and security costs
- Indirect manufacturing overhead costs property taxes, depreciation on PPE
4. Period Costs (Non-Manufacturing Costs)
AKA non-inventoriable costs
- Include selling and admin costs
Produt osts follo the produt, period osts follo the period
Financial reporting on income statement as COGS
5. Inventory in Manufacturing Companies
3 types of Inventory:
a) Materials Inventory Account shows the balance of the cost of unused materials
b) Work-in-Progress Account shows the manufacturing costs that have been
incurred and assigned to partially completed units of product
c) Finished Goods Inventory Account shows the cost assigned to all completed
products that have not been sold
6. Finding Ending Balance of Inventory
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Beginning balance + additions to inventory = Ending Balance + Withdrawals from
Inventory
Ending Balance = Beginning Balance + Additions to inventory Withdrawals from
Inventory
7. Statement of Cost of Goods Sold
a) Compute the cost of direct materials used during the period
Costs of Direct Materials Used = Materials Inventory Beginning Balance + Direct
Materials Purchased Materials Inventory Ending Balance
b) Calculate total manufacturing costs for the period
Total Manufacturing Costs = Cost of Direct Materials Used + Cost of Direct Labor + Total
Manufacturing Overhead Costs
c) Determine total cost of goods manufactured for the period
Cost of Goods Manufactured = WIP Inventory Beginning Balance + Total Manufacturing
Costs WIP Inventory Ending Balance
d) Determine total cost of goods manufactured for the period
COGS = Finished Goods Beginning Balance + COGs Manufactured Finished Goods
Inventory Ending Balance
*this is fair game for the exam, 14 equations to solve
**know how Statement of COGS works
8. Inventory in Other Companies
Merchandising Companies
- No manufacturing costs; Only purchases costs
- Only 1 inventory account on the balance sheet (merchandising inventory account)
- COGS = Beginning Merchandise Inventory + Net Cost of Purchases Ending
Merchandise Inventory
Service Companies
- No manufacturing costs; Only purchases costs
- No inventory on balance sheet
- Calculate cost of sales rather than COGS
9. Prime and Conversion Costs
Manufacturing costs are often classified
Prime Cost Direct Material and Direct Labor
- Primary cost
Conversion Cost Direct Labor and Manufacturing Overhead
- oder ties, soe opaies that do’t ee use laor at all, so they do’t at
to make 2 separate accounts
10. Overtime Labor Costs
Overtime labor and idle time costs are considered part of indirect overhead costs
Idle time worker is there but there is a problem with the factory machine; wages will
hae to e paid, ut it’s idiret oerhead ost
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