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Chapter 2

Chapter 2 Equations.docx


Department
Accounting
Course Code
ACC 406
Professor
Lili Ma
Chapter
2

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Chapter 2 Equations
Total product/manufacturing cost= Direct material + Direct labor + Overhead
Unit cost= (Total product cost) / (# of units produced)
Prime cost= Direct material + Direct labor
Conversion cost= Overhead + Direct labor
Direct materials used in production = Beginning materials inventory +
Purchases – Ending material inventory
COGM= Direct material used in production + Direct labour used in production
+ Manufacturing overhead costs used in production + Beginning WIP
inventory – Ending WIP inventory
COGS = Beginning finished goods inventory + COGM – Ending finished
goods inventory
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