All costs incurred in a merchandising firm are considered to be period costs. Review Questions T/F False Review Questions T/F 35. Depreciation is always considered a product cost for external financial reporting purposes in a manufacturing firm. Review Questions T/F False Review Questions T/F 36. Selling and […]
All costs incurred in a merchandising firm are considered to be period costs. Read More »
Differential costs can be either fixed or variable. Review Questions T/F True Review Questions T/F 28. A fixed cost is constant per unit of product. Review Questions T/F False Review Questions T/F 29. The variable cost per unit is constant and does not depend on how many units are produced. Review Questions T/F True
Differential costs can be either fixed or variable. Read More »
Labor hours An activity base (also called a cost driver) is a measure of what causes the incurrence of variable costs. As the level of the activity base increases, the total variable cost increases proportionally. Units produced (or sold) is not the only activity base within companies. A cost can be considered variable if
Which of the following would be considered a product cost for external financial reporting purposes? A. Cost of a warehouse used to store finished goods. B. Cost of guided public tours through the company’s facilities. C. Cost of travel necessary to sell the manufactured product. D. Cost of sand spread on the factory floor to absorb oil from manufacturing
Income Statement Costs can also be classified as product or period costs. Product costs include all the costs that are involved in acquiring or making a product. More specifically, it includes direct materials, direct labor, and manufacturing overhead. Consistent with the matching principle, product costs are recognized as expenses when the products are
All executive, organizational, and clerical costs. A manufacturing company incurs many other costs in addition to manufacturing costs. For financial reporting purposes, most of these other costs are typically classified as selling costs and administrative costs. These costs are also called selling, general and administrative costs, or SG&A. Selling and administrative costs are incurred in
All executive, organizational, and clerical costs. Read More »
Example of Direct Materials Raw materials that become an integral part of the product and that can be conveniently traced directly to it. Example: A radio installed in an automobile
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Classifications of Manufacturing Costs Manufacturing costs are usually grouped into three main categories: direct materials, direct labor, and manufacturing overhead. These costs are incurred to make a product. Manufacturing Costs Direct materials are an integral part of a finished product and their costs can be conveniently traced to it. Indirect materials are generally small
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Explaining the Individual Project Part 1: Summarize what a contribution format income statement depicts, as compared to the traditional format. Please discuss Explaining the Individual Project Part 2: Using the following company data, show how the two income statement formats would look side by side. Traditional- versus contribution-format statements are as follows: Explaining
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Traditional format income statements are prepared primarily for external reporting purposes. Review Questions T/F True Review Questions T/F 2. In a contribution format income statement, sales minus cost of goods sold equals the gross margin. Review Questions T/F False Review Questions T/F 3. In a traditional format income statement for a merchandising