ADMN 3021H Chapter Notes - Chapter 2: Indirect Costs, Income Statement, Sunk Costs
Document Summary
Chapter 2 cost terms, concepts, and classifications. Classifications of manufacturing costs: direct materials, raw materials that become an integral part of the product and that can be conveniently traced directly to it, ex. A radio installed in an automobile: direct labour, those labour costs that can be easily traced to individual units of product, ex. Wages paid to automobile assembly: manufacturing overhead, manufacturing costs that cannot be easily traced directly to specific units produced, ex. Classifications of costs: prime cost combination of direct material and direct labour, conversion cost combination of direct labour and manufacturing overhead. Overtime premiums: the overtime premiums for all factory workers are usually considered to be part of manufacturing overhead, product specific overtime premiums are part of direct labour. Non-manufacturing costs: marketing or selling costs costs necessary to get the order and deliver the, administrative costs all executive, organizational, and clerical costs.