Chapter 16&17

Question 1

Direct Labor

Answer 1

Employees convert materials into finished products. Cost of employee wages.
Must be: an intergalactic part of the finished product and significant portion of the total cost of the product.
Examples: wages of employees who cut guitars out of raw materials.
Mechanics wages, machine operators wages, and assemblers wages.
(Factory Costs)

Question 2

Factory Overhead/manufacturing overhead, factory burden.

Answer 2

Cost that are incurred in the manufacturing process other than direct materials and labor.
Indirect costs of the product.
Include: heating/lighting the factory, repairing and maintaining equipment, property taxes, insurance, depreciation of equipment.
(Factory Costs)

Question 3

Administrate Expenses

Answer 3

(Non Factory Costs)

Question 4

Marketing Expense

Answer 4

(Non Factory Costs)

Question 5

Prime Costs

Answer 5

Consist of direct materials and direct labor cost. Direct materials+direct labor= Prime Costs

Question 6

Conversion Costs

Answer 6

Consist of direct labor and factory overhead costs
Conversion cost are the costs of converting the materials into a finished product.
Direct labor + factory Overhead= conversion Costs

Question 7

Fixed Costs

Answer 7

Fixed

Question 8

Mixed Costs

Answer 8

Mixed

Question 9

Product Costs

Answer 9

Consist of manufacturing cost: direct materials, direct labor, and factory overhead

Question 10

Period Costs

Answer 10

Consist of selling and administrative costs: Selling expense: Are incurred in marketing the product and delivering the product to the customer.
Administrative expense: Are incurred in managing the company and are not directly related to the manufacturing or selling functions

Question 11

Direct Materials

Answer 11

Raw materials converted into finished products. Cost must be: an intergalactic part of the finished product and a significant portion of the total cost of the product.
Examples: wood used to make guitars, electronic components to a tv, tires for a car, silicon wafers for microcomputer chips.
(Factory Costs)

Question 12

Financing Accounting

Answer 12

Information is reported at fixed intervals (monthly, quarterly, yearly) in general-purpose financial statements. Reported on income, retained earnings, balance sheet, and statement of cash flow.
Used by: shareholders, creditors, government agencies, the general public

Question 13

Managerial Accounting

Answer 13

Information is designed to meet specific needs of a company’s management. Includes: historical data and estimated data
Uses: direct daily operations, planning further operations, and developing business strategies.
Does not have to be: prepared at fixed intervals, for the business as a whole, and according to GAAP(generally accepted accounting principles)

Question 14

Financing Accounting

Answer 14

Information is reported at fixed intervals (monthly, quarterly, yearly) in general-purpose financial statements. Reported on income, retained earnings, balance sheet, and statement of cash flow.
Used by: shareholders, creditors, government agencies, the general public

Question 15

Managerial Accounting

Answer 15

Information is designed to meet specific needs of a company’s management. Includes: historical data and estimated data
Uses: direct daily operations, planning further operations, and developing business strategies.
Does not have to be: prepared at fixed intervals, for the business as a whole, and according to GAAP(generally accepted accounting principles)