Mizzou ACCTCY 2037 - Chapter 15 Outlines (5 pages)

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Chapter 15 Outlines



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Chapter 15 Outlines

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Pages:
5
School:
University of Missouri
Course:
Acctcy 2037 - Accounting II

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Chapter 15 Product Costing System in Manufacturing Operations The process of determining and accumulating the costs of products and activities within a company is called cost accounting Job order costing system Process costing system Activity based costing Common elements of cost accounting systems o Three production inputs to the manufacture of a product Direct materials Raw Materials Inv Accts Pay Cash Raw Materials Inv Goods in Process Goods in Process Finished Goods Finished Goods COGS Direct labor Goods in Process Wages Payable Factory overhead Indirect materials o Raw Materials Inv Accts Pay Cash o Raw Materials Inv Factory Overhead Indirect Labor o Factory Overhead Wages Payable o Raw Materials Cost Include both direct and indirect materials Include cost of direct materials as one of the three manufacturing costs that make up the cost of the finished product Difficult to associate the cost of indirect materials with individual products so companies normally include indirect materials as a part of factory overhead o Labor Costs Direct labor people who work with the direct materials Include direct labor costs of the product Include additional payroll costs payroll taxes pensions and other fringe benefits associated with these employees as a part of factory overhead Indirect labor is part of factory overhead o Factory overhead costs Cannot be traced directly to a specific unit Company includes total cost of factory overhead as one of three manufacturing costs Includes a large number and a wide variety of different manufacturing costs companies normally treat these costs together a single cost The Structure of Cost Accounting Systems o The task of the cost accounting system is to classify the costs incurred according to activities performed and then to assign the costs to the product output of those activities o The perpetual inventory system Most cost accounting systems use a perpetual inventory system to record the costs of the raw materials goods in process



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