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Glossary of Managerial Accounting

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Created by sanlaan

Manufacturing Costs 3 broad categories
Direct Materials
Direct Labor
Manufacturing Overhead

Indirect Materials
Treated as manufacturing overhead--things like glue in all furniture or solder for pc chips. Not worth it to trace the exact amount in each product.
Manufacturing Overhead
All costs of manufacturing except direct materials and direct labor. Factory costs, rent, heat, light, etc.
Nonmanufacturing Costs categories
Selling and Administrative Costs
Selling Costs
Order-getting and Order-filling costs. Advertising, Sales commissions, sales salaries, shipping.
Administrative Costs
General management costs other than manufacturing or selling. Executive pay, VP's secretary, the corporate jet, etc.
Prime Cost
Sum of Direct Materials and Direct Labor Costs
Conversion Cost
Sum of Direct Labor and Manufacturing Costs. Costs used to convert raw materials into the finished product.
Basic Equation for Inventory Accounts
Beginning Balance + Additions to Inventory = Ending Balance + Withdrawals from Inventory
COGS in a Merchandising Company equation
Beginning Merchandise Inventory + Purchases = Ending Merchandise Inventory + COGS

or

COGS = Beginning merchandise inventory + Purchases - Ending merchandise inventory



COGS in a Manufacturing Company equation
COGS = Beginning finished goods inventory + COGM - Ending finished goods inventory

or

Beginning finished goods inventory + COGM = Ending finished goods inventory + COGS



COGM equation
Direct materials:
Beginning raw materials inventory + Purchase of raw materials - Ending raw materials inventory

plus

Direct Labor

plus

Manufacturing Overhead
Plus

Beginning Work in Process Inventory - Ending Work in Process Inventory

all equals COGM













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