Textbook Notes (362,868)
Canada (158,081)
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ACCT 2230 (113)
Chapter 2

Chapter 2 Managerial Accounting Notes

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University of Guelph
ACCT 2230
Elliot Currie

Chapter 2 Managerial AccountingCost Terms ConceptsClassificationsGeneral Cost ClassificationsManufacturing costs3 broad categories1 Direct Materials the materials that go into final product are often called raw materials Raw materials may be used to refer to any materials used in final product the finished product of one company could be raw materials of another company Indirect Materials small items of material eg blue nails May become essential part of finishedproduct but are traceable to the product only at great cost or inconvenience2 Direct Labour also called touch labour since workers typically touch the product while its being made Eg Assembly line workers carpenters bricklayers etcIndirect Labour labour costs that cant be physically traced to the creation of products or not easilyconvenientlyEg Janitors supervisors materials handlers etc3 Manufacturing overhead all costs associated w manufacturing except direct materialsdirect overhead This includes indirect materialsindirect labour maintenance property tax costs to operate factory Manufacturing overhead costs average 17 of sales revenue Conversation costDirect labour costsmanufacturing overhead costs Prime costDirect Materials costsdirect labour costClassification of labour costs of manufacturing Overtime premiums The extra hourly wage rate paid to workers who must work above their normal time requirements 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 Some companies treat employee benefits as manufacturing costs while other companies treat employee benefit expenses of direct laborers as additional direct labour costsNonManufacturing costs 2 categories1 Marketing or Selling costs includes all costs necessary to secure customer ordersget finished produ
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