ACCT 210 1st Edition Lecture 6 Outline of Last Lecture I Product costs II Direct materials III Functional cost classifications Outline of Current Lecture I Functional cost classifications continued II Three stages of production III Inventory cost flows IV Example with T accounts Current Lecture 1 Functional cost classifications continued Total costs Product Product costs costs Direct Direct labor Direct labor Period costs Period costs Indirect Direct materials Direct materials 2 Three stages of production a Direct materials i Work not started ii Raw materials iii Supplies b Works in progress conversion i Direct labor Manufacturing Manufacturing overhead overhead General General administrative G A expenses Selling expenses ii Overhead c Finished work goods i Includes all costs incurred to produce the product 3 Inventory cost flows a 4 Example with T accounts 5 Direct materials 10 000 62 000 beginning balance 60 000 Work in progress 15 000 60 000 48 000 72 000 direct materials Finished goods 29 000 172 000 direct labor 185 000 overhead 172 000 12 000 ending balance 23 000 16 000 6 Job order costing a Many different products are produced each period b Custom made to order products c Production process is divided into batches or jobs with a definite beginning and ending d Costs are accumulated separately by job e Use job offer cost sheet to accumulate all manufacturing costs for each job
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