COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
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Merchandising Process
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Cost Accounting Process
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Manufacturing Process
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Trading Process
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Detailed explanation-1: -Manufacturing: Manufacturing is a process of converting raw materials into finished goods through the use of machinery, humans, and chemical processes.
Detailed explanation-2: -Example of Product Costs Direct material: The cost of wood used to create the tables. Direct labor: The cost of wages and benefits for the carpenters to create the tables. Manufacturing overhead (indirect material): The cost of nails used to hold the tables together.
Detailed explanation-3: -Prime costs include direct material and direct labor costs. Conversion costs include direct labor and overhead expenses. Both are a metric used to determine the efficiency of production.
Detailed explanation-4: -Direct Costs A direct cost includes raw materials, labor, and expense or distribution costs associated with producing a product. The cost can easily be traced to a product, department, or project. For example, Ford Motor Company (F) manufactures cars and trucks.