, labor, and manufacturing overhead. Some manufacturers use standard costs in their accounting system. The term price is used when referring to the amount that a seller has established for its products. Accountants might...
, labor, and manufacturing overhead. Some manufacturers use standard costs in their accounting system. The term price is used when referring to the amount that a seller has established for its products. Accountants might...
costs (which are direct materials, direct labor, and manufacturing overhead). Nonmanufacturing overhead costs are the company’s selling, general and administrative (SG&A) expenses plus the company’s interest...
at the time of each sale will be increased or decreased. Example of Product Warranty Liability Assume that an automobile manufacturer has found that it spends $1,000 in labor and parts for the necessary repairs covered...
than merely spreading the costs on the basis of direct labor hours or production machine hours. A second use of ABC involves categorizing inventory items into “A” items, “B” items, and “C” items. The “A”...
as the subsidiary ledger containing the details for the general ledger account Work in Process. The Work in Process account will now be a control account containing summary amounts for direct materials, direct labor,...
How can a manufacturer determine the precise cost of its products? A manufacturer may never be able to determine the precise cost of its individual products. The reason is that most of the manufacturing costs (other than...
costs are the raw materials, labor, and manufacturing overhead used to produce the goods. Think of product costs as clinging to the goods produced. The rent associated with the manufacturing operations is part of...
with the costs of direct labor and manufacturing overhead) A prime cost The costs of direct materials are reported in the financial statements based on where they are: Raw materials not yet in production are...
How do I compute the product cost per unit? Definition of Product Cost per Unit In accounting, a product’s cost is defined as the direct material, direct labor, and manufacturing overhead. Other costs such as...
method. Typically the traditional method meant allocating the manufacturing overhead costs on the basis of the number of units of output, the direct labor hours, or the production machine hours. Allocating the many...
Our Explanation of Payroll Accounting discusses the taxes and benefits which are withheld from employees' pay as well as the taxes and benefits that are expenses for the employers. Also provided are examples of the...
Our Explanation of Nonmanufacturing Overhead provides examples of a manufacturer's expenses which are not considered to be costs of a product for financial reporting. However, they are operating expenses that will have...
/conventional costing systems. Select... direct indirect 15. Which of the following would be the best driver of the costs associated with setting up a production machine in a job shop? Select... Direct labor hours...
of the page. 1. If a person is an exempt salaried employee, is the person entitled to overtime pay when working more than 40 hours during a workweek? Select... Yes No View Coaching In this question, exempt is referring...
produced on the basis of the number of the production machine hours used or the number of direct labor hours used. Weakness of Traditional Method of Allocating Factory Overhead The weakness of the traditional method is...
as well as the goods that have been sold will have “absorbed” the fixed manufacturing overhead costs (as well as the costs of variable manufacturing overhead, direct labor, and direct materials). Fixed manufacturing...
capital expenditure projects are required and may not increase a company’s profits…think OSHA or environmental mandates Some of projects will provide cost savings through faster operations or reductions in manual...
. (These are in addition to the other product and production costs of direct materials and direct labor.) Since the fixed manufacturing overhead costs (such as depreciation, salaries of manufacturing personnel, etc.) are...
direct materials, direct labor, and manufacturing overhead. Manufacturers are also required to consistently follow their selected cost flow assumption. Examples of Inventory Valuation Assume that a new company purchased...
that generally occur for the other products manufactured. A cost system developed for inventory valuation is limited to the cost of direct materials, direct labor, and manufacturing overhead. The total cost of providing...
the accounting period ends. Therefore, the company must prepare an adjusting entry dated for the last day of the month that debits Wages Expense and credits Wages Payable for the labor used and the amount owed....
, the process costing system is more appropriate.) Process Costing Process costing is a cost accounting system for calculating the manufacturing costs (direct materials, direct labor and manufacturing overhead) of...
Our Explanation of Evaluating Business Investments compares four of the techniques for reviewing potential capital expenditures. You will be introduced to accounting rate of return, payback, net present value, and...
These are the inventoriable costs and include a product’s direct materials, direct labor, and manufacturing overhead. manufacturing costs (or) production costs These are the inventoriable costs and include a...
Our Explanation of Financial Statements provides you with the highlights of each of the five external financial statements issued by U.S. corporations. Our insights will give you a good understanding of what the...
Our Explanation of Improving Profits will assist you in focusing on the costs and revenues that are relevant (and ignoring those which are not relevant) for improving profits and eliminating losses. Examples of the...
/office factory selling 3. Service department costs are likely to be part of __________. Select... direct materials direct labor manufacturing overhead 4. The allocated costs of service departments will be...
Our Explanation of Payroll Accounting discusses the taxes and benefits which are withheld from employees' pay as well as the taxes and benefits that are expenses for the employers. Also provided are examples of the...
Our Explanation of Payroll Accounting discusses the taxes and benefits which are withheld from employees' pay as well as the taxes and benefits that are expenses for the employers. Also provided are examples of the...
Our Explanation of Inventory and Cost of Goods Sold will take your understanding to a new level. You will see how the income statement and balance sheet amounts are affected by the various inventory systems and cost flow...
. $500 Wrong. Try another answer. $550 Right! [40 hours X $10] plus [10 hours X $15] = $550 OR [50 hours X $10] plus [10 hours X $5] = $550 Use the following information for Questions 15 – 17: An employee worked the...
Our Explanation of Activity Based Costing illustrates how manufacturing overhead costs for a product will differ when costs are allocated using only the number of machine hours, as opposed to being allocated using the...
Our Explanation of Accounting Basics uses a simple story to introduce important accounting concepts and terminology. It illustrates how transactions will be included in a company's financial statements.
Our Explanation of Income Statement helps you learn the most important features of a corporation's income statement (also known as the statement of operations or profit and loss statement). We provide more understanding...
building. A plumbing contractor repaired the water line and billed the company $15,000 for materials plus $20,000 for labor. In addition, the company had to replace damaged goods that had a cost of $10,000. Assuming the...
Our Explanation of Financial Accounting introduces some of the basic accounting concepts and how they affect the income statement, balance sheet, and other financial statements.
Our Explanation of the Balance Sheet provides you with a basic understanding of a corporation's balance sheet (or statement of financial position). You will gain insights regarding the assets, liabilities, and...
Our Explanation of Financial Ratios includes calculations and descriptions of 15 financial ratios. As you calculate the financial ratios you will also gain a deeper understanding of a company's operations and financial...
Featured Review
"I have a BS in accounting, and was previously working as an accountant/cash manager. Then, I took 15 years off to raise my kids. Once I decided to go back to work, I felt very out of the loop, so to speak, when it came to accounting. My education and work experience had been such a long time ago. I found AccountingCoach quite by accident, but once I looked it over, I became a PRO user so that I could track my progress and have lifetime access to many of the other advantages PRO provides, like the videos and quick tests. I really liked that everything was organized into subjects and that I could either go in order, or click into different areas and read or work on a specific accounting subject. Working through various parts of your program really helped me remember different things that I had previously learned, and also helped give me the confidence to get back on track with my career. I am currently working as an assistant controller. I still go back in now and then to reinforce some of my previous education, as well as to go over things I don't have as much experience in, like non-profit accounting. This really is a great site, whether you're new to accounting, or you already have an accounting background and just need to use it to reinforce your knowledge or improve your skills. I have never regretted spending the money to become a PRO user." - Danna E.
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviews
For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.
We now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: