Textbook Notes (363,501)
Canada (158,383)
Management (802)
MGT223H5 (26)
Minlei Ye (13)
Chapter 02

MGT223 Chapter02:Costs Terms, Classification, Cost Flow Notes

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University of Toronto Mississauga
Minlei Ye

MGT223 Chapter02: Costs Terms, Classification, Cost Flow Notes Manufacturing Costs: 1. Direct Material(DM): materials that became an integral part of a product and can be easily traced 2. Direct Labour(DL): factory labour costs that can be traced easily to a product 3. Manufacturing Overhead(MOH): all costs associated with manufacturing except direct materials and direct labour - Indirect materials: those raw materials that became integral part of an product and cannot be easily or conveniently traced, ex. janitorial supplies, oil for machines - Indirect labour: the portion of labour cost that cannot be easily traced to a product, ex. salaries of factory supervisor, wages of a janitor - Other MOH: ex. depreciation of factory equipment, machine maintenance cost, factory utilities, rent in the factory Conversion Cost = MOH + DL Prime Cost = DL + DM Non-Manufacturing Costs: all other costs involved in the operation of a company besides the manufacturing costs - Administrative costs: include all executives, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing, marketing, or selling - Marketing or selling costs: all costs necessary to secure customer orders to get the finished product or service to the customer, ex. commissions, delivery expense, advertising costs General Financial Predicting cost Assigning Decision classification reporting behaviour costs to cost making obejcts Manufacturing cost Product cost Variable cost Direct cost Differential
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