# Accounting

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Accounting

## 1. Product and Period costs

### 1.1. Product costs [ Manufacturing] [FACTORY]

1.1.1. Direct Material

1.1.1.1. Costs

1.1.1.1.1. Things that go into products

1.1.2. Direct Labor

1.1.2.1. Costs

1.1.2.1.1. People whom produce the goods

1.1.2.1.2. Insurace

1.1.3.1. Indirect material

1.1.3.1.1. Costs

1.1.3.2. Indirect Labor

1.1.3.2.1. Other people working in the factory, but not producing the goods

1.1.3.3. Other

1.1.3.3.1. Factory utilities

1.1.3.3.2. Factory lease

1.1.3.3.3. Factory insurace

### 1.2. Period costs [nonmanufacturing]

1.2.1. Selling expenses

1.2.3.1. Accounting and finance department

1.2.3.2. Chief financial officer

1.2.3.3. President of the company

1.2.3.4. Legal part of the company

1.2.3.5. Sales department

## 2. Variable vs Fixed costs

### 2.1. Variable costs

2.1.1. Level of activity of produced goods vary

2.1.2. Example

2.1.2.1. Truck drivers

2.1.2.1.1. Driven low or high miles driven to transfer goods to our clients

## 3. Cost of goods manufactured

### 3.1. Current manugacturing costs

3.1.1. Total manufacturing cost = DM + DL + MfgOH

### 3.2. Formulas

3.2.1. X [ any asset, material that was used & consumed or expended during a period = begining of blance X + ammount of X added during the period = ending balance of X

3.2.2. Amount used = beginning amount - Ending amount

3.2.2.1. Begining amount + added amount + ending amount

3.2.2.1.1. 10 + 2 - 4 = 8

3.2.2.2. Example T

3.2.2.2.1. Begin balance [1000] + amount added [ 7000] = ? /5000/ end balance is [3000]

3.2.3. Cost of goods manufactured =

3.2.3.1. = beginning WIP balance

3.2.3.2. + total or current MFG [manufacturing costs] cost

3.2.3.3. - ending WIP balance

3.2.4. Cost of goods sold =

3.2.4.1. beginning FG[ finished goods] balance

3.2.4.2. + COGM [ cost of goods manufactured

3.2.4.3. - ending FG balance

## 4. Predetermined Manufacturing overhead rates

### 4.1. Job order costing

4.1.1. Suited to smaller batches of unique custom jobs

4.1.1.1. Example ( customized choppers or emergency room services )

### 4.2. Process costing

4.2.1. Suited to high volumes of similar items

4.2.1.1. Example (Soap or cosmetics factory or flu shot clinic)

### 4.3. Example question

4.3.1. Formula

4.3.1.1. No 1

4.3.1.1.1. Direct labor hours

4.3.1.2. No 2

4.3.1.2.1. Direct labor dollars

4.3.1.3. No 3

4.3.1.3.1. Machine hours