GARRISON CH. 2 : managerial
accounting & cost concepts
administrative - ✔️✔️c. _________ costs = period costs
1. accounting
2. president's salary
3. IT
direct materials - ✔️✔️the raw materials used to create inventory
- ✔️✔️direct materials example:
steel, glass, electric wire --> build a boat
direct labor - ✔️✔️the labor costs that can easily be traced to the development of a
company's inventory
- ✔️✔️direct labor example:
shop worker, Bob, works all day on boat #A753
Bob's work can easily be traced to job #A753
manufacturing overhead - ✔️✔️all manufacturing costs except direct labor & direct
materials
- ✔️✔️manufacturing overhead examples:
a) indirect materials --> grease for the shop's machines
b) depreciation on all shop items
c) indirect labor --> shop supervisor
conversion costs:
manufacturing overhead + direct labor - ✔️✔️conversion costs:
_______ ________ + _______ _________
direct materials + direct labor - ✔️✔️prime costs
_________ _________ + _______ _________
, sunk cost - ✔️✔️a cost that should NOT be considered for decision making
- ✔️✔️Period costs/ noninventoriable costs:
a. administrative building example
marketing/ selling costs = period costs - ✔️✔️b. ________/ ________ costs = period
costs
administrative & selling costs - ✔️✔️General statement:
________ & _______ costs are PERIOD COSTS
1) period costs --> expense --> PERIOD COSTS
a. ending inventory & COGS
b. product costs include:
1) direct materials
2) direct labor
3) manufacturing overhead
c. product cost: sales, COGS - ✔️✔️Product Costs/ Inventoriable costs:
a. product costs: ________ _______ & ________
b. product costs include:
1)
2)
3)
c. Product costs: great example of the matching principle
product cost: _______ & ________
d. product cost example: shop building
sold inventory - ✔️✔️COGS created by: ______ _________
cost behaviors - ✔️✔️the way costs change because of changes in a company's
activity levels
accounting & cost concepts
administrative - ✔️✔️c. _________ costs = period costs
1. accounting
2. president's salary
3. IT
direct materials - ✔️✔️the raw materials used to create inventory
- ✔️✔️direct materials example:
steel, glass, electric wire --> build a boat
direct labor - ✔️✔️the labor costs that can easily be traced to the development of a
company's inventory
- ✔️✔️direct labor example:
shop worker, Bob, works all day on boat #A753
Bob's work can easily be traced to job #A753
manufacturing overhead - ✔️✔️all manufacturing costs except direct labor & direct
materials
- ✔️✔️manufacturing overhead examples:
a) indirect materials --> grease for the shop's machines
b) depreciation on all shop items
c) indirect labor --> shop supervisor
conversion costs:
manufacturing overhead + direct labor - ✔️✔️conversion costs:
_______ ________ + _______ _________
direct materials + direct labor - ✔️✔️prime costs
_________ _________ + _______ _________
, sunk cost - ✔️✔️a cost that should NOT be considered for decision making
- ✔️✔️Period costs/ noninventoriable costs:
a. administrative building example
marketing/ selling costs = period costs - ✔️✔️b. ________/ ________ costs = period
costs
administrative & selling costs - ✔️✔️General statement:
________ & _______ costs are PERIOD COSTS
1) period costs --> expense --> PERIOD COSTS
a. ending inventory & COGS
b. product costs include:
1) direct materials
2) direct labor
3) manufacturing overhead
c. product cost: sales, COGS - ✔️✔️Product Costs/ Inventoriable costs:
a. product costs: ________ _______ & ________
b. product costs include:
1)
2)
3)
c. Product costs: great example of the matching principle
product cost: _______ & ________
d. product cost example: shop building
sold inventory - ✔️✔️COGS created by: ______ _________
cost behaviors - ✔️✔️the way costs change because of changes in a company's
activity levels
