Question

Hello,

I am requesting your help. This course-related to Managerial Accounting.

Thank you,

Michelle

___________________________________

Search the Internet and find the websites of two manufacturers. After reviewing the websites, decide if you think each manufacturer uses job or process costing. Share your decision and explain why you came to this conclusion.

In addition, make a list of costs you think are incurred in the production and selling of products for your two manufacturers. Label the costs as direct material, direct labor, manufacturing overhead and period costs. Report a minimum of two costs in each category for each of your manufacturers.

Direct Materials – What two types of materials?

Direct Labor – What two types of labor?

Mfg. OH – What 2 types of OH?

Periods – What 2 types of period costs?

Answer 1

two type of material

1) direct material

Direct materials are the raw materials that are directly used in producing the finished product. The costs included in the direct material cost are all of the costs associated with acquiring the raw material: the raw material itself, shipping-in cost, and insurance, among others. Common examples of direct materials are plastic and components.

2) indirect material

Indirect material Similar to indirect labor, indirect materials are materials that are not the main components of the finished goods. Examples are glue, screws, nails, and other materials such as machine oils, lubricants, and miscellaneous supplies that may not even be physically incorporated into the finished good. Indirect materials are a manufacturing overhead cost.

two type of labor cost

1) direct labor

Direct labor costs are the costs of labor that can be directly traced to the production of a product. The cost of wages for production workers is a direct labor cost for a manufacturing company.

2) indirect labor

Indirect labor is labor that is part of the overall production process but does not come into direct contact with the product. A common example is labor cost for employees of the manufacturing equipment maintenance department. Indirect labor is a manufacturing overhead cost.

two type of manufacture overhead

1) variable manufacture overhead

2) fixed manufacture overhead

Manufacturing overhead costs are the company’s costs related to the production process that are not direct material or direct labor but are necessary costs of production. Examples are indirect labor, indirect materials, rework costs, electricity and other utilities, depreciation of plant equipment, and factory rent.

two type of period cost

1) variable overhead

Variable costs are costs such as material and labor (among production costs) or shipping-out costs (among period costs) that are incurred only when the activity takes place. The per unit variable cost remains unchanged as the activity increases or decreases while total variable cost increases as the activity level increases and decreases as the activity level decreases.  

2) fixed overhead

Fixed costs do not change within the relevant range of activity. As long as the activity level remains within the relevant range, the total amount of fixed costs does not change with a change in activity level such as production volume. However, the cost per unit decreases as the activity level increases and increases as the activity level decreases