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Management Accounting
2020
BUILDING BLOCKS
CHAPTER 14 & 18 L01
Merchandising:
Manufacturing:
Manufacturing Activities
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Non–manufacturing Activities
Manufacturing Activities…
… incur Manufacturing or Product costs
Manufacturing Activities…
… Create three types of inventory or
Product or Manufacturing costs:
Raw Materials
Work in Process
Finished Goods
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F/S presentation
2017 2016
( in Millions)
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Remember !!
PRODUCT COST
=
MANUFACTURING COSTS
WE NEED A PROCESS TO TRACK THE COSTS OF MANUFACTURING
DM
DL WIP FG COGS
MOH
IN PROCESS COMPLETE SELL
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WIPOP.+(DM USED+DL+MOH)–
WIPEND.=COGM
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Other Terms….
Controllable & Uncontrollable costs:
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Fixed costs….
Variable costs…
Mixed cost
• Or Semi-variable costs
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• Out-of-Pocket Costs
– Outlays of cash
• Sunk Costs
– Already incurred costs
– Conversion Costs
DL + MOH
– Prime Costs
DM + DL
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Cost definitions
# Cost PR or PC V or F DM/DL/MOH
1 Tire cost
2 Sales commission
3 Wood glue
4 Hourly wages
5 VP salary
6 Advertising
7 Depreciation (Factory)
8 Assembly line wages
9 Delivery (To Customers)
10 Newsprint
11 Plant insurance
12 Light bulb glass
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END
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