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Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773

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BuyFindarrow_forward

Managerial Accounting: The Corners...

7th Edition
Maryanne M. Mowen + 2 others
ISBN: 9781337115773
Textbook Problem
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Classifying Cost of Production

A factory manufactures jelly. The jars of jelly are packed six to a box, and the boxes are sold to grocery stores. The following types of cost were incurred:

Chapter 2, Problem 40E, Classifying Cost of Production A factory manufactures jelly. The jars of jelly are packed six to a , example  1

Required:

Classify each of the costs as direct materials, direct labor, or overhead by using the following table. The row for “Jars” is filled in as an example.

Chapter 2, Problem 40E, Classifying Cost of Production A factory manufactures jelly. The jars of jelly are packed six to a , example  2

To determine

Classify the costs as direct material, direct labor, and manufacturing overhead.

Explanation

Cost:

Cost can be defined as the cash and cash equivalent which is incurred against the products or its related services which will benefit the organization in the future. There are two types of costs that are direct and indirect costs.

Those materials which constitute the part of the finished product and can be identified directly to the manufactured products are known as direct materials. The labor that can be traced and identified directly to the manufactured products is known as direct labor. Manufacturing overheads can be defined as the costs of the product other than direct labor and direct materials associated with the manufacturing process.

The classification of the costs is given below:

CostsDirect materials ($)Direct labor ($)Manufacturing Overhead ($)
JarsX  
SugarX  
FruitX  
Pectin (thickener used in jams and jellies)X  

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