Glossary of Managerial Accounting
Created by sanlaan
- Manufacturing Costs 3 broad categories
- Direct Materials
- 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
COGS = Beginning merchandise inventory + Purchases - Ending merchandise inventory
- COGS in a Manufacturing Company equation
- COGS = Beginning finished goods inventory + COGM - Ending finished goods inventory
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
Beginning Work in Process Inventory - Ending Work in Process Inventory
all equals COGM
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