BUS 254 Chapter Notes - Chapter 2: Sandpaper, Variable Cost, Behaviorism

• School: Simon Fraser University
• Department: Business Administration
• Course: BUS 254
• Professor: Michael Favere- Marchesi

Document Summary

Study objective 1: define the three classes of manufacturing costs and differentiate between product costs and period costs. One very important type of information is related to costs. Managers should ask questions such as the following: Manufacturing consists of aciviies and processes that convert raw materials into inished goods. merchandising sells goods in the same form in which they are purchased. Raw materials are the basic materials and parts used in the manufacturing process. Raw materials that can be physically and directly associated with the inished product during the manufacturing process are called direct materials. some raw materials cannot be easily associated with the inished product= indirect materials. Companies account for the indirect materials as part of the manufacturing overhead. Direct labour: the work of factory employees that can be physically and directly associated with convering raw materials into inished goods. Indirect labour: the work of factory employees that can"t be easily associated with the inished product.