ch2 guidlines Flashcards
How to compute Cost of Goods Sold
compute for merchandising companies and manufacturing companies
Merchandising companies COGS
Beginning inventory \+ Purchase plus freight-in and import duties = Cost of goods available for sale - Ending inventory = COGS
Manufacturing companies COGS
Beginning finished goods inventory \+ Cost of goods manufactured = Cost of goods available for sale - Ending finished goods inventory = COGS
Cost of Goods Manufactured
Beginning work in process inventory
+ Total manufacturing costs incurred during year
(DM used + DL + manufacturing overhead)
= Total manufacturing costs to account for
- Ending work in process inventory
= COGS
total cost
= total fixed costs + (variable costs per unit * number of units)
Current average cost
total cost / number of units
total projected costs
total fixed costs + total variable costs
projected average costs
total costs / number of units
service companies
provide customers with intangible services. Have no inventories on the balance sheet
merchandising companies
resell tangible products purchased ready-made from suppliers. Have only one category of inventory
manufacturing companies
use labor, plant, and equipment to transform raw materials into new finished products. Three categories of inventory: raw materials, work in process, and finished goods
added value
R&D Design Production or Purchase Marketing Distribution Customer Service
cost objects
direct (traced) and indirect costs (allocated)
who uses total cost
managers
who uses inventoriable product costs
external financial reporting
