Manufacturing Accounting
Manufacturing Accounting
Unlike service companies, manufacturing companies have three inventory accounts: raw materials, work-in-process, and finished goods. Manufacturing costs can be classified into three categories: direct material, labor, and overhead. Another method to classify costs is as product and period costs. Product costs, like raw material, can be traced directly to the product. Period costs are non-manufacturing costs, such as administrative and insurance costs.
For this discussion, do the following:
Explain manufacturing costs, prime and conversion costs, and product and period costs.
Explain the steps to calculate cost of goods manufactured and cost of goods sold.
Develop an example of a schedule of cost of goods manufactured and a manufacturing income statement.
DQ2 Direct Write-off Method and Allowance Method [WLOs: 3, 4] [CLO: 5]
Prior to beginning work on this discussion, read Chapter 21 in the textbook. In addition, the MyLab materials listed in the Recommended Resources section this week may provide more in-depth information for this discussion (optional).
Write: Make sure your response addressing the prompt is more than 200 words and that you include an in-text citation or a brief quote from the reading material where appropriate.
Cost-volume-profit (CVP) can be used to calculate the break-even point. The break-even point is the sales level at which the company does not earn a profit or loss. CVP can also be used to add in an amount of profit (target profit) in the calculation. Costs can either be fixed, variable, or mixed.
Include the following in your post:
Explain variable costs, fixed costs, and mixed costs.
What is meant by the term relevant range?
What is contribution margin and how is it calculated?
Explain the three methods: the equation approach, the contribution approach, and the contribution margin approach to calculate the break-even point.
Present a chart that depicts the four steps that are necessary to develop the CVP chart.
What is margin of safety and operating leverage?
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