Professional Documents
Culture Documents
A cost
is the measure of
resources given
up to achieve a
particular purpose.
PRODUCT COSTS, PERIOD COSTS AND
EXPENSES
Period costs are costs that are expensed during the time
period in which they are incurred.
COST CLASSIFICATIONS
Product Costs
Period Costs
Cost of goods sold
Examples ???
The
Product
DIRECT MATERIAL
Example:
Wages paid to an
automobile assembly
worker.
MANUFACTURING OVERHEAD
Examples: depreciation on
plant and equipment,
property taxes, insurance,
utilities, overtime premium
and other factory related
expenses
CLASSIFICATIONS OF COSTS IN MANUFACTURING
COMPANIES
Prime Conversion
Cost Cost
MANUFACTURING COST FLOWS
Direct Material
Work in
Direct Labor Process
Inventory
Manufacturing
Overhead
MANUFACTURING COST FLOWS
Direct Material
Work in
Direct Labor Process
Inventory
Manufacturing
Overhead
Finished
Goods
Inventory
MANUFACTURING COST FLOWS
Direct Material
Work in
Direct Labor Process
Inventory
Manufacturing
Overhead
Finished Cost of
Goods Goods
Inventory Sold
SCHEDULE OF COST OF GOODS MANUFACTURED
Beginning work-in-process
inventory is carried over
from the prior period.
Comet Computer Corporation
Schedule of Cost of Goods Manufactured
Your factory’s total EB bill is based on how many units you consumed. What about minimum
charge?
Bill amount
Units consumed
VARIABLE COST PER UNIT EXAMPLE
The cost per unit is constant. For example, Rs 7.00 per unit.
Units consumed
FIXED COST PER UNIT EXAMPLE
Production level
COST CLASSIFICATIONS