Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 1, Problem 1Q
What are the three major types of product costs in a manufacturing company?
Expert Solution & Answer
To determine
Introduction:
Determination of types of product cost in a manufacturing company describes the elements of costs which are covered in the product cost. This is essential to determine the total product cost for the purpose of inventory valuation.
The types of product cost involved in the production of the product in a manufacturing concern are to be determined.
Answer to Problem 1Q
Solution:
The three major product cost are:
- Direct material cost.
- Direct labor cost.
- Manufacturing overheads.
Explanation of Solution
The product cost is the sum total of all the costs incurred to get the finished product into existence. The Product cost comprises of following cost:
- Direct Material cost: are the purchased raw materials that go directly into producing the products. These costs are variable in nature.
- Direct Labor cost: are the wages paid to laborers who are directly involved in the processing of raw material for its conversion in to finished goods. These costs are also variable in nature.
- Manufacturing Overheads: The Manufacturing overheads are termed as all indirect costs which are incurred in the factory or the works place as necessary cost for the processing. These include indirect material, stores consumed, indirect labour, depreciation of machines, repairs of machines, other indirect cost related to factory, etc. The manufacturing overheads may be fixed in nature or variable in nature.
Product cost is the sum of all the above cost incurred in producing a product.
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Chapter 1 Solutions
Introduction To Managerial Accounting
Ch. 1 - What are the three major types of product costs in...Ch. 1 - Define the following: (a) Direct materials, (b)...Ch. 1 - Explain the difference between a product cost and...Ch. 1 - Distinguish between (a) a variable cost, (b) a...Ch. 1 - What effect does an increase in the activity level...Ch. 1 - Define the following terms: (a) Costbehavior and...Ch. 1 - What is meant by an activity base when dealing...Ch. 1 - Managers often assume a strictly linear...Ch. 1 - Distinguish between discretionary fixed costs and...Ch. 1 - Does the concept of the relevant range apply to...
Ch. 1 - What is the difference between a traditional...Ch. 1 - Prob. 12QCh. 1 - Define the following terms: differential cost,...Ch. 1 - Only variable costs can be differential costs. Do...Ch. 1 - Prob. 1AECh. 1 - This Excel worksheet form is to be used to...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Prob. 4F15Ch. 1 - Prob. 5F15Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Prob. 8F15Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Martinez Company’s relevant range of production is...Ch. 1 - Prob. 15F15Ch. 1 - Identifying Direct and Indirect Costs Northwest...Ch. 1 - Prob. 2ECh. 1 - Classifying Costs as Product or Period Costs...Ch. 1 - Prob. 4ECh. 1 - Prob. 5ECh. 1 - Traditional and Contribution Format Income...Ch. 1 - Direct and Indirect CostsKubin Company’s relevant...Ch. 1 - Product Costs and Period Costs; Variable and Fixed...Ch. 1 - Fixed, Variable, and Mixed Costs Refer to the data...Ch. 1 - Differential Costs and Sunk Costs Refer to the...Ch. 1 - Cost Behavior; Contribution Format Income...Ch. 1 - Product and Period Cost Flows The Devon Motor...Ch. 1 - Prob. 13ECh. 1 - Cost Classification Wollogong Group Ltd. of New...Ch. 1 - Traditional and Contribution Format Income...Ch. 1 - Cost Classifications for Decision Making Warner...Ch. 1 - Classifying Variable and Fixed Costs and Product...Ch. 1 - PROBLEM 1—18 Direct and Indirect Costs; Variable...Ch. 1 - Traditional and Contribution Format Income...Ch. 1 - Variable and Fixed Costs; Subtleties of Direct and...Ch. 1 - Traditional and Contribution Format Income...Ch. 1 - Cost Terminology; Contribution Format Income...Ch. 1 - Cost Classification Listed below are costs found...Ch. 1 - Different Cost Classifications for Different...Ch. 1 - Traditional and Contribution Format Income...
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- What are the three categories of manufacturing costs included in the cost of finished goods and the cost of work in process?arrow_forwardWhat are the similarities in and differences between the manufacturing cost flows for job-order firms and process firms?arrow_forwardWhat are the similarities in calculating the cost of materials used in production, the cost of goods manufactured, and the cost of goods sold?arrow_forward
- Which of the following is a prime cost? A. direct labor B. work in process inventory C. administrative labor D. factory maintenance expensesarrow_forwardWhat are factory overhead expenses, and what distinguishes them from other manufacturing costs? What other terms are used to describe factory overhead expenses?arrow_forwardProduct (or manufacturing) costs consist of a. direct materials, direct labor, and selling costs. b. direct materials, direct labor, manufacturing overhead, and operating expense. c. administrative costs and conversion costs. d. prime costs and manufacturing overhead. e. selling and administrative costs.arrow_forward
- Which of the following is a prime cost? A. indirect materials B. direct labor C. administrative expenses D. factory depreciation expensesarrow_forwardWhy are labor and manufacturing overhead grouped together as conversion costs?arrow_forwardDescribe the product life cycle. How do unit-level costs behave in relation to the product life cycle? Batch-level costs? Product-level costs? Facility-level costs?arrow_forward
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