Assigning Costs to Cost Objects: Direct & Indirect Costs
Costs in Manufacturing Companies: Manufacturing & Non-manufacturing costs
Product and/or Period costs
Today's Business Environment
Income Statements
100
Accounting teacher's salary for the accounting department.
What is a direct cost?
100
The cost of factory workers assembling an iphone
What is a manufacturing cost (Direct labor)?
100
The sum of direct materials and direct labor are also described using this term.
What is a prime cost?
100
This integrates information from many different departments such as: human resources, accounting, sales, payroll, procurement, etc.
What is an ERP system?
100
It is calculated by deducting cost of goods sold from sales
What is gross profit?
200
The salary of the district (equivalent of a state) manager for the starbucks store on kingwood drive.
What is an indirect cost?
200
The cost of a security guard charged with guarding the manufacturing facility at night when all workers are not present.
What is a manufacturing cost (manufacturing overhead)?
200
Selling expenses and administrative expenses are considered what kind of cost.
What is a period cost?
200
Stan wants to start a company. He isn't just interested in making money. He wants to help the environment and make a positive impact in the community?
What is triple bottom line?
200
It is calculated by deducting sales and administrative expenses from gross profit
What is operating income?
300
The cost of red paint for a car painted red.
What is a direct cost?
300
Depreciation on the corporate jet used by the executives. The corporate jet was also used to fly one manufacturing employee (employee of the year) to the annual company retreat in Hawaii. This was the only time a manufacturing employee used the corporate jet.
What is a non manufacturing cost (administrative cost)?
300
Product costs are stored in this account after the product is finished but before the product is sold
What is inventory?
300
ABC car dealership is tired of the costs of storing inventory. It is piloting a new store. In this store customers first order the car. Once ordered, the car is then built and hand delivered to the customer's desired location.
What is just in time management?
300
ABC is a manufacturing company. It adds up its beginning inventory, direct labor, direct materials used, indirect materials, indirect labor, plant depreciation and plant insurance expenses
What is total manufacturing costs to account for?
400
The salary of the history professor for the accounting department.
What is neither a direct cost or indirect cost? (the cost of the history professor would not be allocated to the accounting department.)
400
Harry works as a salesman for chair manufacturing incorporated. Harry has an office located at the manufacturing facility. Harry spends time talking to the factory workers everyday to better understand the product.
What is a non manufacturing cost (selling cost)?
400
Prime Cost plus Conversion Cost minus Direct Labor minus manufacturing overhead equals what type of cost
What is a Prime Cost?
400
At its executive meetings, Amazon leaves one chair in the room empty. This chair is symbolic of the customer and the company's commitment to continually improving the customer's shopping experience on Amazon
What is e-commerce and total quality management?
400
AAA company started making 20 belts during the period. It had to shut down the factor for three days due to a water leak. At the end of the period it finished the 20 belts and transferred them to the warehouse to be shipped to stores.
What is cost of goods manufactured?
500
Sara has a degree in math and accounting. She spends 50% of time teaching for the math and accounting departments.
What is a direct cost? (The accounting department will only be allocated the portion of Sara's salary related to accounting tutoring).
500
An accountant who spends 50% of her time working at the corporate office and 50% of her time working at the factory.
What are manufacturing costs (manufacturing overhead) and non-manufacturing costs (administrative expenses)?
500
This term is also equal to the total cost of a product (product cost) minus direct material cost.
What is a conversion cost?
(Total product cost equals direct materials, direct labor and manufacturing overhead. If you remove direct materials from total product cost, direct labor and manufacturing overhead are left. This is also known as conversion cost.)
500
Business experts have theorized that these three forces are playing a major role today's current business environment.
What is a shift toward a service economy, global competition and time based competition
500
The moonwalk is a backward walk popularized by Michael Jackson. If inventory in a manufacturing company were to do a moonwalk it would travel through these categories in this very specific order.
What is cost of goods sold, finished good inventory, work in process inventory and raw materials inventory.