ACG-2071 Chapter Notes - Chapter 2: Income Statement, Earnings Before Interest And Taxes, Sunk Costs
Document Summary
Merchandising companies: resell tangible products purchased from suppliers. Manufacturing companies: convert raw material to finish product using labor, plant and equipment: typically focus on in managerial accounting. A cost object is anything we want to know the cost of (ex: cost of having a football team) Direct costs: can trace to a particular cost object (ex: cost of having a football coach) Indirect costs: cannot trace to cost object (ex: cost of having an athletic director), cost needs to be allocated. Value chain: research and development design production or purchases marketing. Product costs are costs that (manufacturing comp) go into manufacturing a product, or (merchandising comp) purchasing the goods and selling them: aka inventoriable costs because they sit on the balance sheet until product is sold. Period costs: research and development, design, marketing, customer service, operating expenses. Inventoriable product costs of a manufacturing company: direct materials, direct labor, manufacturing overhead.
