University:
Kentucky State University
Course:
ECO 301 | Microeconomics
Academic year:

2024
Views:

95

Pages:

8
Author:

rawnwinen9wn

2-8 Learning Objective 2 Distinguish between product costs and period costs and give examples of each. . 2-9 Product Costs Versus Period Costs Product costs include direct materials, direct labor, and manufacturing overhead. Cost of Good Sold Inventory Period costs include all selling costs and administrative costs. Expense Sale Balance Sheet Income Statement Income Statement . 2-10 Quick Check ✓ Which of the following costs would be considered a period rather than a product cost in a manufacturing company? A. Manufacturing equipment depreciation. B. Property taxes on corporate headquarters. C. Direct materials costs. D. Electrical costs to light the production facility. E. Sales commissions. . 2-11 Quick Check ✓ Which of the following costs would be considered a period rather than a product cost in a manufacturing company? A. Manufacturing equipment depreciation. B. Property taxes on corporate headquarters. C. Direct materials costs. D. Electrical costs to light the production facility. E. Sales commissions. . 2-12 Classifications of Costs Manufacturing costs are often classified as follows: Direct Material Direct Labor Prime Cost Manufacturing Overhead Conversion Cost . 2-13 Comparing Merchandising and Manufacturing Activities Merchandisers . . .  Buy finished goods.  Sell finished goods. Manufacturers . . .  Buy raw materials.  Produce and sell finished goods. MegaLoMart . 2-14 Balance Sheet Merchandiser Current assets ◆ Cash ◆ Receivables ◆ Prepaid Expenses ◆ Merchandise Inventory Manufacturer Current Assets Cash Receivables Prepaid Expenses Inventories • Raw Materials • Work in Process • Finished Goods . 2-15 Balance Sheet Merchandiser Current assets ◆ Cash ◆ Receivables ◆ Prepaid Expenses Partially complete ◆ Merchandise products – some Inventory material, labor, or overhead has been added. Manufacturer Current Assets Cash Receivables Materials waiting to be processed. Prepaid Expenses Inventories • Raw Materials • Work in Process • Finished Goods Completed products awaiting sale. .