BUSI 1003 Chapter Notes - Chapter 10: Finished Good, Income Statement
1 May 2014
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Chapter 10 - accounting systems for manufacturing businesses. Manufacturing firms earn revenue from manufacturing and selling finished goods. Divide inventories on the balance sheet into raw materials, work in process, finished. Direct cost can be directly and conveniently traced to final product. Indirect - cost can not be directly traced to final product or it may be insignificant or inconvenient to do so. Expensed on the income statement in the period that they are incurred. Selling costs example: advertising, travel, shipping, sales commissions, Administrative costs example: accounting, it, executive compensation, Charged to inventory accounts until product is sold. Cost accounting systems - used to establish prices, control operations, and give price data. Job order cost systems often used by companies that make custom products for customers or batches of similar products. Process cost systems make units of product that are indistinguishable from each other. Determine the correct amount to pay each employee for each pay period.
