 an expanded phase of financial accounting which informs management promptly with the cost of rendering a particular service, buying and selling a product, and producing a product.  a field of accounting that measures, records and reports information about costs.

these refer to materials used in the manufacturing process that become a significant part of the finished goods.

these are salaries paid to employees who work directly with the raw materials in converting them to finished goods.

all costs incurred in the factory that cannot be considered as direct materials or direct labor. - sometimes called manufacturing overhead, manufacturing expenses, or factory burden.

materials that are used in small amounts in the manufacturing process or that cannot easily be traced to specific products.

wages of factory personnel who do not work directly on raw materials

mostly relate to physical plant (building, machinery, and equipment)

reflects the primary sources of costs for units in production. - Direct Materials + Direct Labor

indicates the costs required to convert the raw materials into finished goods. - Direct Labor + Factory Overhead

- represents the materials still unused at the end of a period.

- represents the cost of goods placed in the production but not yet finished at the end of the period. - also called as Goods in Process Inventory

- represents the cost of goods already manufactured and ready for sale during a period but not yet sold at the end of the period.

- uses the “actual” costs of materials, labor and factory overhead in determining the total cost of a product.

- uses the “standard” or predetermined costs of materials, labor and factory overhead in determining the total cost of a product.

- uses actual cost of materials, actual cost of labor and applied factory overhead in determining the total cost of a product

- the factory overhead “actually” incurred during a period.

- measured using a pre-determined rate or application rate multiplied by the actual activity level or cost driver for a period.

TYPES OF MANUFACTURING COSTS

Three categories of Factory Overhead

Inventories for a manufacturing company

System of Cost Accumulation