introduction to managerial accounting ch.

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1、ManagerialCostConceptsandCostBehaviourAnalysisManufacturingCostslManufacturingconsistsofactivitiestoconvertrawmaterialsintofinishedgoods.lIncontrast,amerchandisingfirmsellsgoodsintheforminwhichtheywerebought.DirectmaterialslRawmaterialsarebasicmaterialsandpart

2、susedinmanufacturing.lRawmaterialsthatcanbephysicallyanddirectlyassociatedwiththefinishedproductarecalleddirectmaterials.lExamplesinclude:nFlourinthebakingofbreadnSyrupinthebottlingofsoftdrinksnSteelusedinmakingautomobilesDirectlabourlWorkoffactoryemployeestha

3、tcanbephysicallyanddirectlyassociatedwithconvertingrawmaterialsintofinishedgoodsisdirectlabour.lExamplesincludenBottlersatCoca-ColanBakersatSaraLeenTypesettersatanewspaperManufacturingOverheadlCoststhatareindirectlyassociatedwithmanufacturingoffinishedgoodslAl

4、lmanufacturingcoststhatcannotbeclassifiedasdirectmaterialanddirectlabourlExamplesinclude:nIndirectmaterialsnIndirectlabournAmortizationonfactorybuildings,insurance,taxes,maintenanceonfactoryfacilities.IndirectmaterialslRawmaterialsthatcannotbeeasilyassociatedw

5、iththefinishedproductarecalledindirectmaterialslIndirectmaterialsdonotphysicallybecomepartofthefinishedproductorrepresenttoosmallapartofthefinishedproductintermsofcostlConsideredpartofmanufacturingoverheadlExamplesinclude:nLubricantsnCleaningsuppliesnPolishing

6、compoundsIndirectlabourlWorkoffactoryworkersthathavenophysicalassociationwiththefinishedproduct,orforwhichitisimpracticaltotracetothegoodsproduced,isindirectlabourlExamplesinclude:nWagesofmaintenanceworkers,janitors,andsecurityguardsnSupervisorsnTime-KeepersPr

7、imeCostsandConversionCostslPrimecostsarethesumofalldirectmaterialscostsanddirectlabourcosts.Thesearealldirectmanufacturingcosts.lConversioncostsarethesumofalldirectlabourcostsandmanufacturingoverheadcosts,whichtogetherarethecostsofconvertingrawmaterialsintoafi

8、nalproduct.ProductCostslConsistsofthedirectmaterialcost,thedirectlabourcost,andthemanufacturingoverheadcostlAnecessaryandintegralpartofproducingtheproductlRecordedasinventorywhenin