Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Product Versus Period Costs
Another way to look at manufacturing costs is to think of them as attaching to a product. In other words, goods result from the manufacturing process and "product costs" are the summation of direct labour, direct materials, and factory overhead. This is perhaps simple enough to understand. But, how are such costs handled in accounting records?
To create your understanding of the answer to this question, think back to your prior studies about how the retailer accounts for its inventory costs. When inventory is purchased/buy, it constitutes benefit on the balance sheet which is the "inventory". This inventory remains as the benefit until the goods are sold, at which point inventory is gone, and cost of inventory is transferred to the cost of goods sold on income statement to be matched with the revenue from the sale.
By analogy, a manufacturer pours money into the direct materials, manufacturing direct labour and overhead. Should this spent money be expensed on income statement immediately? No! This collection of the costs constitutes the benefit on the balance sheet ("inventory"). This inventory remains as benefit until the goods are sold, at which point the inventory is gone, and the cost of the inventory is transferred to cost of goods sold on income statement (to be matched with revenue from sale). There is small difference between a retailer and the manufacturer in this regard, except that the manufacturer is acquiring its inventory via a series of expenditures (for material, labour, etc.), somewhat than in one fell swoop. What is significant to note about product costs is that they attach to inventory and are thus said to be the "inventorial" costs.
answers to figure 5 exercise 18.10
Principles of Marginal Costing The principles of marginal costing are as given: 1. Period fixed costs are similar, for any volume of sales and production provided suc
Q. A firm uses capital and labor to produce a single output good. The production function is given by F(K, L) = K 2 L where K is the amount of capital and L is the amount of labo
importance value index ivi
Describe the meaning of the fixed production overhead variances calculated under the standard absorption costing system and talk about their usefulness to the management of X Ltd.
1. Develop a list of tasks that a newly appointed CFO would be responsible for, including relevant reports they will access and review and the schedule for when this would occur.
Conan O'Brien Logging and Lumber Company owns 3,300 acres of timberland on the north side of Mount Leno, which was purchased in 2000 at a cost of $650 per acre. In 2012, O'Brien be
What are the reasons of preparing income statement?
Slash and Burn is a monopolist that can sell its output at these prices and with these total costs: Output Price Total Cost
#question.ABC Corportaion produces and sell two products. In the most recent month, Product 123 had sales of $33,000 and variable expenses of $15,840. Product 245 had sales of $42,
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd