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Direct Cost Vs Indirect Cost | Managerial Accounting | CMA Exam | Ch 2 P 1
 
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Direct Cost A direct cost is a cost that can be easily and conveniently traced to a specified cost object. Indirect Cost An indirect cost is a cost that cannot be easily and conveniently traced to a specified cost object. For example, a Campbell Soup factory may produce dozens of varieties of canned soups. A common cost is a cost that is incurred to support a number of cost objects but cannot be traced to them individually. A common cost is a type of indirect cost. A particular cost may be direct or indirect, depending on the cost object. Direct Labor Direct labor consists of labor costs that can be easily (i.e., physically and conveniently) traced to individual units of product. Direct labor is sometimes called touch labor because direct labor workers typically touch the product while it is being made. Labor costs that cannot be physically traced to particular products, or that can be traced only at great cost and inconvenience, are termed indirect labor. Just like indirect materials, indirect labor is treated as part of manufacturing overhead. Indirect labor includes the labor costs of janitors, supervisors, materials handlers, and night security guards. Although the efforts of these workers are essential, it would be either impractical or impossible to accurately trace their costs to specific units of product. Hence, such labor costs are treated as indirect labor. Manufacturing Overhead Manufacturing overhead, the third manufacturing cost category, includes all manufacturing costs except direct materials and direct labor. Manufacturing overhead includes items such as indirect materials; indirect labor; maintenance and repairs on production equipment; and heat and light, property taxes, depreciation, and insurance on manufacturing facilities. A company also incurs costs for heat and light, property taxes, insurance, depreciation, and so forth, associated with its selling and administrative functions, but these costs are not included as part of manufacturing overhead. Only those costs associated with operating the factory are included in manufacturing overhead. Various names are used for manufacturing overhead, such as indirect manufacturing cost, factory overhead, and factory burden. All of these terms are synonyms for manufacturing overhead. Nonmanufacturing Costs Nonmanufacturing costs are often divided into two categories: (1) selling costs and (2) administrative costs. Selling costs include all costs that are incurred to secure customer orders and get the finished product to the customer. These costs are sometimes called order-getting and order-filling costs. Examples of selling costs include advertising, shipping, sales travel, sales commissions, sales salaries, and costs of finished goods warehouses. Selling costs can be either direct or indirect costs. For example, the cost of an advertising campaign dedicated to one specific product is a direct cost of that product, whereas the salary of a marketing manager who oversees numerous products is an indirect cost with respect to individual products. Administrative costs include all costs associated with the general management of an organization rather than with manufacturing or selling. Examples of administrative costs include executive compensation, general accounting, secretarial, public relations, and similar costs involved in the overall, general administration of the organization as a whole. Administrative costs can be either direct or indirect costs. For example, the salary of an accounting manager in charge of accounts receivable collections in the East region is a direct cost of that region, whereas the salary of a chief financial officer who oversees all of a company’s regions is an indirect cost with respect to individual regions. Nonmanufacturing costs are also often called selling, general, and administrative (SG&A) costs or just selling and administrative costs. Direct cost, indirect cost, common cost, manufacturing overhead cost, indirect material, indirect labor, selling cost, administrative cost, product cost, period costs, prime cost, conversion cost, variable cost, fixed cost, committed fixed cost, discretionary fixed cost, relevant range, mixed cost, engineering approach, scattergraph, high-low method, traditional format, contribution format income statement, differential cost, differential revenue, opportunity cost.sunk cost, relevant cost.
Direct vs. Indirect Costs
 
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This video defines direct and indirect costs and provides an example to illustrate the difference between direct and indirect costs. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 51619 Edspira
What is a Direct Cost vs. Indirect Cost?
 
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WANNA MASTER MANAGERIAL ACCOUNTING? CLAIM YOUR 50% OFF COUPON BELOW! https://www.udemy.com/managerial-accounting-the-ultimate-beginner-course/?couponCode=50_OFFM Hey Students! In this video today, we use an easy example of a car to show you how Direct and Indirect Costs work in Managerial Accounting. How are Direct Costs traceable such as engines and wheels? How do you account for electricity or insurance? Find out how in this engaging video. Take a look! ******************************************************************** Wanna Master Managerial Accounting? Claim your 50% Off Coupon Now! Managerial Accounting - The Ultimate Beginner Course: https://www.udemy.com/managerial-accounting-the-ultimate-beginner-course/?couponCode=50_OFFM ******************************************************************** SUBSCRIBE SO YOU CAN MASTER ACCOUNTING! https://www.youtube.com/channel/UCCyBG-qtLqfvCdSG34ES8Ag WANT TO LEARN MORE? CONNECT WITH ME BELOW: ******************************************************************** FACEBOOK: https://www.facebook.com/accountinguniversity?ref=hl GOOGLE+ https://plus.google.com/u/0/b/118255991627414878635/+Accountinguniv/posts WEBSITE https://accountinguniv.com/ ******************************************************************** Comment Below if you have any questions!
Views: 18285 Accounting University
Direct Material, Direct Labor & Overhead, Product and Period Cost | Managerial Accounting | CMA Exam
 
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Direct cost, indirect cost, common cost, manufacturing overhead cost, indirect material, indirect labor, selling cost, administrative cost, product cost, period costs, prime cost, conversion cost, variable cost, fixed cost, committed fixed cost, discretionary fixed cost, relevant range, mixed cost, engineering approach, scatter-graph, high-low method,
II. B. Direct vs. Indirect Product Costs.wmv
 
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Description of Direct Materials, Direct Labor and Indirect factory costs which are called "Manufacturing Overhead"
Views: 5273 PamelaDJonesWCU
Product Cost Vs Period Cost | Managerial Accounting | CMA Exam | Ch 2 P 2
 
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Product Costs For financial accounting purposes, product costs include all costs involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead.1 Product costs “attach” to units of product as the goods are purchased or manufactured, and they remain attached as the goods go into inventory awaiting sale. Product costs are initially assigned to an inventory account on the balance sheet. When the goods are sold, the costs are released from inventory as expenses (typically called cost of goods sold) and matched against sales revenue on the income statement. Because product costs are initially assigned to inventories, they are also known as inventoriable costs. We want to emphasize that product costs are not necessarily recorded as expenses on the income statement in the period in which they are incurred. Rather, as explained above, they are recorded as expenses in the period in which the related products are sold. Period Costs Period costs are all the costs that are not product costs. All selling and administrative expenses are treated as period costs. For example, sales commissions, advertising, executive salaries, public relations, and the rental costs of administrative offices are all period costs. Period costs are not included as part of the cost of either purchased or manufactured goods; instead, period costs are expensed on the income statement in the period in which they are incurred using the usual rules of accrual accounting. Keep in mind that the period in which a cost is incurred is not necessarily the period in which cash changes hands. For example, as discussed earlier, the costs of liability insurance are spread across the periods that benefit from the insurance—regardless of the period in which the insurance premium is paid. Page 28 Prime Cost and Conversion Cost Two more cost categories are often used in discussions of manufacturing costs—prime cost and conversion cost. Prime cost is the sum of direct materials cost and direct labor cost. Conversion cost is the sum of direct labor cost and manufacturing overhead cost. The term conversion cost is used to describe direct labor and manufacturing overhead because these costs are incurred to convert materials into the finished product. product cost, period costs, prime cost, conversion cost, variable cost, fixed cost, committed fixed cost, discretionary fixed cost, relevant range, mixed cost, engineering approach, scattergraph, high-low method, traditional format, contribution format, Direct cost, indirect cost, common cost, manufacturing overhead cost, indirect material, indirect labor, selling cost, administrative cost, cpa exam. Manufacturing Overhead Manufacturing overhead, the third manufacturing cost category, includes all manufacturing costs except direct materials and direct labor. Manufacturing overhead includes items such as indirect materials; indirect labor; maintenance and repairs on production equipment; and heat and light, property taxes, depreciation, and insurance on manufacturing facilities. A company also incurs costs for heat and light, property taxes, insurance, depreciation, and so forth, associated with its selling and administrative functions, but these costs are not included as part of manufacturing overhead. Only those costs associated with operating the factory are included in manufacturing overhead. Various names are used for manufacturing overhead, such as indirect manufacturing cost, factory overhead, and factory burden. All of these terms are synonyms for manufacturing overhead. Nonmanufacturing Costs Nonmanufacturing costs are often divided into two categories: (1) selling costs and (2) administrative costs. Selling costs include all costs that are incurred to secure customer orders and get the finished product to the customer. These costs are sometimes called order-getting and order-filling costs. Examples of selling costs include advertising, shipping, sales travel, sales commissions, sales salaries, and costs of finished goods warehouses. Selling costs can be either direct or indirect costs. For example, the cost of an advertising campaign dedicated to one specific product is a direct cost of that product, whereas the salary of a marketing manager who oversees numerous products is an indirect cost with respect to individual products. Administrative costs include all costs associated with the general management of an organization rather than with manufacturing or selling. Examples of administrative costs include executive compensation, general accounting, secretarial, public relations, and similar costs involved in the overall, general administration of the organization as a whole. Administrative costs can be either direct or indirect costs.
Manufacturing Costs (Direct Fixed & Variable, Indirect Fixed & Variable, Whats Included In Each)
 
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Manufacturing Variable & Fixed costs understanding what is included for (1) Direct manufacturing costs for both Fixed & Variable costs & (2) Indirect manufacturing (overhead) for both Fixed & Variable Indirect costs, explaining traceable variable & fixed costs for direct manufacturing costs from the prospective of individual product being processed & overall costs from supporting departments, looking at assigning costs to the product (direct & indirect costs) & cost behavior as (fixed & variable costs)
Views: 4038 Allen Mursau
Product Costs and Period Costs
 
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This video provides a relatively simple, qualitative explanation of how expenses are categorized as either product (manufacturing) costs versus period (non-manufacturing) costs within a production firm and is intended for students just beginning a course in managerial accounting.
Views: 38671 The Accounting Tutor
2.3 Cost object, Direct Costs and Indirct Costs
 
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2.3 Cost object, Direct Costs and Indirct Costs
Views: 31848 Dee Amaradasa
Product Cost | Direct Cost | Indirect Cost | Manufacturing Overhead | CMA exam | CPA Exam |CH 16 p 3
 
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Direct cost, indirect cost, common cost, manufacturing overhead cost, indirect material, indirect labor, selling cost, administrative cost, product cost, period costs, prime cost, conversion cost, variable cost, fixed cost, committed fixed cost, discretionary fixed cost, relevant range, mixed cost, engineering approach, scattergraph, high-low method, traditional format, contribution format income statement, differential cost, differential revenue, opportunity cost.sunk cost, relevant cost.
Material costs direct and indirect
 
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Direct material costs: Automobile part A: $675000 annually Automobile part B: $1050000 Indirect costs for both A and B: $180000 annually purchasing in time and other costs. Pedagogical example from: https://www.business-case-analysis.com/activity-based-costing.html#example1031 Created at http://goanimate4schools.com/
Views: 2854 Jon Ellrose
Manufacturer Price Sheet: Material, Labor, Overhead & Profit
 
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The following video breaks down how a manufacturer should come up with a price for industrial finished goods. First, the company must account for its material costs and apply a 5 percent indirect cost to that portion of the manufacturer's price sheet. This 5 percent is meant to offset overruns in production and or additional costs of financing inventory and material purchases. Second, the company must account for its labor relative to each operation performed to turn a raw material into a finished good. The calculation involves defining the operation and applying the labor cost to both the setup time in manufacturing and the actual run time. Third, all labor costs are added in order to come up with a complete total for all the costs of manufacturing a given product. Those costs are then followed up by the company's overhead, which is calculated by taking its indirect expenses divided by its direct expenses. Indirect expenses are those expenses that are in addition to the the costs needed to produce a part. Direct expenses are exactly that. These include the costs involved or expenses involved in manufacturing the part. Finally, the company adds its mark-up in order to secure a profit on the sale. Profit is critical because it helps to fund the company's pursuit of new product introductions and secure its long-term future. Here is a sample of the Manufacturer Price Sheet in Excel Format http://www.driveyoursuccess.com Video explains how to price a product with direct material, labor, overhead and profit
Views: 27793 Ian Johnson
3 Types of Manufacturing Costs (Direct Materials, Direct Labor, Manufacturing Overhead)
 
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This videos identifies and defines the three types of manufacturing costs: Direct Materials, Direct Labor, and Manufacturing Overhead. The video also provides examples of each type of manufacturing cost to better illustrate the concepts. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 135818 Edspira
Direct and Indirect costs
 
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This short BeeBusinessBee video has been created to quickly explain the business term direct and indirect costs. This video also explores the different direct and indirect costs, with a worked example that you can follow and interact with. You can find more resources online at; www.beebusinessbee.co.uk
Views: 5735 Bee Business Bee
What is Direct Material & Indirect Material ? Urdu / Hindi
 
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This Video Give The Basic logic's & Basic concept of Direct Material & Indirect Material With Easy Examples ? Urdu / Hindi ZPZ Education Channel Link: www.youtube.com/channel/UCwFzeQDf9cGm_ZeTXV_t5SA
Views: 1388 ZPZ Education
[#1] Introduction to Cost Accounting - (COST SHEET) :-by kauserwise
 
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Introduction to Cost Accounting - (COST SHEET) Accounting tutorial, Elements of costs, Material cost, Labour cost, other expenses, Direct material cost, indirect material cost, direct labour cost, indirect labour cost, direct other expenses, indirect other expenses. Over heads. Factory over heads, office and administrative over heads, selling and distribution over heads. To watch more tutorials pls visit: www.youtube.com/c/kauserwise * Financial Accounts * Corporate accounts * Cost and Management accounts * Operations Research Playlists: For Financial accounting - https://www.youtube.com/playlist?list=PLabr9RWfBcnojfVAucCUHGmcAay_1ov46 For Cost and Management accounting - https://www.youtube.com/playlist?list=PLabr9RWfBcnpgUjlVR-znIRMFVF0A_aaA For Corporate accounting - https://www.youtube.com/playlist?list=PLabr9RWfBcnorJc6lonRWP4b39sZgUEhx For Operations Research - https://www.youtube.com/playlist?list=PLabr9RWfBcnoLyXr4Y7MzmHSu3bDjLvhu
Views: 618836 Kauser Wise
DIRECT AND INDIRECT COSTS
 
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For more videos : www.salmancoolguru.com or subscribe : www.youtube.com/salman2071
Views: 325 SALMAN SHAIKH
Accounting 2002: Indirect Costs vs. Direct Costs
 
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My video presentation for Managerial Accounting.
Views: 416 Anne Christensen
08 Product Cost: Direct Vs. Indirect Cost
 
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تنقسم تكلفة المنتج إلى تكاليف مباشرة وتكاليف غير مباشرة. فكيف يتم التفرقة بين ماهو مباشر وماهو غير مباشر؟ وكيف يتم تحميل كلٍ منهم على المنتج؟ هذا ماسنوضحه في هذا الفيديو مع الأمثلة.
Views: 99 Mahmoud Gad, CMA
7.  Managerial Accounting Ch2 Pt3: Variable versus Fixed, Direct versus Indirect
 
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Accounting Course - Managerial Accounting - Cost Accounting Learning Objectives covered: Explain the differences between variable and fixed costs Identify the differences between direct and indirect costs Describe the cost classifications used in making decisions: differential costs, opportunity costs, and sunk costs Text used: Managerial Accounting Tenth edition Garrison et al. Publisher: McGrawHill
Views: 10398 Mark Meldrum
cost production
 
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The costs related to making or acquiring goods and services that directly generates revenue for a firm. It comprises of direct costs and indirect costs. Direct costs are those that are traceable to the creation of a product and include costs for materials and labor whereas indirect costs refer to those costs that cannot be traced to the product such as overhead
Views: 1563 Danis Maulana
What are Direct, Indirect and Overhead Costs? - Cost Allocation
 
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According to the OMB’s Uniform Guidance, there are only three types of costs – Indirect, Indirect-Admin (Overhead) and Direct. Every organization must define their costs, like how funding runs through the organization, who touches it, what they do and how they do it serves as a foundation for this understanding. So by correctly defining and allocating costs, true cost of service can be fully captured. More on Cost Allocation: https://goo.gl/LOCwDk Download free infographic: https://goo.gl/61V7iG
Views: 3286 Costtree GMG
II. A. Direct vs. Indirect Costs Overview.wmv
 
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Basic definitions of Cost object, direct and indirect costs.
Views: 18181 PamelaDJonesWCU
Direct and indirect costs
 
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Check http://www.jbm.az/ for more videos, slideshows and technical articles! Costs accounting is a section of Management Accounting (rather than Financial Reporting) but it is occasionally referred to by the International Financial Reporting Standards (IFRS). This short video uses a simple case study to explain how costs are classified into direct and indirect.
Views: 2122 www.jbm.az
Direct and indirect costs
 
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Direct  Costs Vs Indirect Costs
 
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This is a lecture on direct versus indirect costs for beginners. This video gives examples of each type of cost and explains the purpose of each cost. I sell valuation reports on Amazon. Please read the description before purchasing. Links to the reports below: DCF Valuation for P&G - http://a.co/d/0kB72nC DCF Valuation for ADP - http://a.co/d/aHDEL6M DCF Valuation for MSFT - http://a.co/d/4jyEvPW
SBIR Accounting: Segregating Direct vs. Indirect Costs
 
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Module 1 of Building an Adequate SBIR Accounting System is segregating direct vs. indirect costs. Your chart of accounts is the backbone of your accounting system. The chart of accounts is typically structured in a manner that segregates direct costs, indirect costs (by indirect cost pool type), and unallowable costs. Your company’s accounting system must demonstrate that all costs are accumulated, whether allowable or unallowable, and segregated where direct costs can be determined as separate from indirect costs. Direct costs are typically structured in a consistent format as budgets included in your government proposals. Direct costs normally include labor, materials and supplies, subcontractors, consultants, equipment, travel and other direct costs. Direct labor is the result of your labor distribution system. Direct materials and supplies are consumables directly attributed to a government contract. Direct subcontract and consulting are for services that are performed directly for a government contract. Direct equipment is for equipment purchased for use specifically for a single government contract (unless government approval is otherwise provided). Direct equipment is owned by the government, although maintained by the contractor from the time of acquisition to the time of disposition as instructed by the government. Direct travel typically includes airfare, lodging, car rental, meals, and incidentals up to any per diem limitations as specified under the federal travel regulations. Direct travel costs above and beyond per diem or other limits remain in the direct cost base, but are not billable to the government contract. Other direct costs are costs not listed elsewhere. Fringe, overhead, general and administrative, bid and proposal, independent research and development, and FAR 31.2 unallowable costs are all indirect costs and NEVER include a direct project. Use of account numbers is an efficient way segregating costs, coding transactions, and clearly identifying structure during a government audit. Accounting-specific software requires a chart of accounts (such as Quickbooks), therefore, designing an accounting system to meet the requirements of this module is a basic function. For more information, please visit www.mokercpa.com
Views: 754 Moker CPA
Developing an Indirect Cost Allocation Plan
 
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This video is part of the Federal-aid Essentials for Local Public Agencies Web site and resource library: http://www.fhwa.dot.gov/federal-aidessentials/essentials.cfm The Federal-aid Essentials Web site contains a resource library of informational videos and related materials. Readily accessible and available when you need an answer, each video addresses a single topic presented in everyday language-condensing the complex regulations and requirements of the Federal-aid Highway Program into easy-to-understand concepts and illustrated examples. This Web site allows you to indicate areas of interest and receive alerts when material that matches your interests becomes available. You also can give feedback that will help FHWA continue to provide useful assistance.
Views: 2187 USDOTFHWA
Predetermined Overhead Rate (what it is and how to calculate it)
 
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This video explains what a predetermined overhead rate is and illustrates how to calculate and apply the predetermined overhead rate with an example. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like us on Facebook, visit https://www.facebook.com/Edspira Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Facebook, visit https://facebook.com/Prof.Michael.McLaughlin To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin
Views: 156072 Edspira
Direct & Indirect Cost
 
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Views: 1630 7airrajah
Job Order Costing Explained | Managerial Accounting | CMA Exam | Ch 3 P 1
 
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Under absorption costing, product costs include all manufacturing costs. Some manufacturing costs, such as direct materials, can be directly traced to particular products. For example, the cost of the airbags installed in a Toyota Camry can be easily traced to that particular auto. But what about manufacturing costs like factory rent? Such costs do not change from month to month, whereas the number and variety of products made in the factory may vary dramatically from one month to the next. Because these costs remain unchanged from month to month regardless of what products are made, they are clearly not caused by—and cannot be directly traced to—any particular product. Therefore, these types of costs are assigned to products and services by averaging across time and across products. The type of production process influences how this averaging is done. Job-order costing is used in situations where many different products, each with individual and unique features, are produced each period. For example, a Levi Strauss clothing factory would typically make many different types of jeans for both men and women during a month. This is a custom product that is being made for the first time, but if this were one of the company’s standard products, it would have an established bill of materials. A bill of materials is a document that lists the type and quantity of each type of direct material needed to complete a unit of product. The materials requisition form is a document that specifies the type and quantity of materials to be drawn from the storeroom and identifies the job that will be charged for the cost of the materials. The form is used to control the flow of materials into production and also for making entries in the accounting records. A job cost sheet records the materials, labor, and manufacturing overhead costs charged to that job. Measuring Direct Labor Cost Direct labor consists of labor charges that can be easily traced to a particular job. Labor charges that cannot be easily traced directly to any job are treated as part of manufacturing overhead. As discussed in a previous chapter, this latter category of labor costs is called indirect labor and includes tasks such as maintenance, supervision, and cleanup. Today many companies rely on computerized systems (rather than paper and pencil) to maintain employee time tickets. A completed time ticket is an hour-by-hour summary of the employee’s activities throughout the day. One computerized approach to creating time tickets uses bar codes to capture data. Computing Predetermined Overhead Rates. There are three reasons for this: Manufacturing overhead is an indirect cost. This means that it is either impossible or difficult to trace these costs to a particular product or job. Manufacturing overhead consists of many different types of cost ranging from the grease used in machines to the annual salary of the production manager. Some of these costs are variable overhead costs because they vary in direct proportion to changes in the level of production (e.g., indirect materials, supplies, and power) and some are fixed overhead costs because they remain constant as the level of production fluctuates (e.g., heat and light, property taxes, and insurance).Page 123 Because of the fixed costs in manufacturing overhead, total manufacturing overhead costs tend to remain relatively constant from one period to the next even though the number of units produced can fluctuate widely. Consequently, the average cost per unit will vary from one period to the next. An allocation base is a measure such as direct labor-hours (DLH) or machine-hours (MH) that is used to assign overhead costs to products and services. The most widely used allocation bases in manufacturing are direct labor-hours, direct labor cost, machine-hours and (where a company has only a single product) units of product. Job order costing, Direct cost, indirect cost, common cost, manufacturing overhead cost, indirect material, job cost sheet, job number, subsidiary ledger, material requisition form, bill of materials, time ticket, allocation base predetermined overhead rate, cost driver, fixed overhead, variable overhead Raw materials, work in process, finished goods, cost of goods manufactured, manufactured overhead cost Cost of goods manufactured Underapplied, overapplied
Product Costs in Manufacturing (direct labor, direct materials, and Overhead expenses )👌
 
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Product Costs Product cost refers to the costs used to create a product. These costs include direct labor, direct materials, consumable production supplies, and factory overhead. To like us on Facebook, visit https://www.facebook.com/accountingPlusS/ Subscribe us: https://www.youtube.com/accountingplus Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product. Direct labor cost is wages that are incurred in order to produce specific goods or provide specific services to customers. Overhead expenses are all costs on the income statement except for direct labor, direct materials, and direct expenses. Overhead expenses include accounting fees, advertising, insurance, interest, legal fees, labor burden, rent, repairs, supplies, taxes, telephone bills, travel expenditures, and utilities. Product cost formula Product cost = Direct materials + Direct labor + Overhead expenses Product cost per unit = Direct materials + Direct labor + Overhead expenses/ Total production units Product Costs Example Product cost = $5,000+1,000+4,000 = 10,000 #Productcosts #Accounting #PC
Views: 141 Accountingplus
Direct and Indirect Costs, Prime Cost and Conversion Costs - Cost Accounting in Urdu
 
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This video discusses: ELEMENTS OF COST CLASSIFICATION OF COST (Direct and Indirect Cost) Prime Cost Conversion Cost Factory Overheads Total production Costs.
cost production
 
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The costs related to making or acquiring goods and services that directly generates revenue for a firm. It comprises of direct costs and indirect costs. Direct costs are those that are traceable to the creation of a product and include costs for materials and labor whereas indirect costs refer to those costs that cannot be traced to the product such as overhead
Views: 1139 Danis Maulana
Free Direct & Indirect Costs Diabetes
 
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Free Direct & Indirect Costs Diabetes
Views: 4 Pat Carlson
Predetermined Overhead Rate | Managerial Accounting | CMA Exam | Ch 3 P 2
 
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manufacturing overhead also needs to be recorded on the job cost sheet. However, assigning manufacturing overhead to a specific job involves some difficulties. There are three reasons for this: Manufacturing overhead is an indirect cost. This means that it is either impossible or difficult to trace these costs to a particular product or job. Manufacturing overhead consists of many different types of cost ranging from the grease used in machines to the annual salary of the production manager. Some of these costs are variable overhead costs because they vary in direct proportion to changes in the level of production (e.g., indirect materials, supplies, and power) and some are fixed overhead costs because they remain constant as the level of production fluctuates (e.g., heat and light, property taxes, and insurance).Page 123 Because of the fixed costs in manufacturing overhead, total manufacturing overhead costs tend to remain relatively constant from one period to the next even though the number of units produced can fluctuate widely. Consequently, the average cost per unit will vary from one period to the next. Given these problems, allocation is used to assign overhead costs to products. Allocation is accomplished by selecting an allocation base that is common to all of the company’s products and services. An allocation base is a measure such as direct labor-hours (DLH) or machine-hours (MH) that is used to assign overhead costs to products and services. The most widely used allocation bases in manufacturing are direct labor-hours, direct labor cost, machine-hours and (where a company has only a single product) units of product. Manufacturing overhead is commonly assigned to products using a predetermined overhead rate. The predetermined overhead rate is computed by dividing the total estimated manufacturing overhead cost for the period by the estimated total amount of the allocation base for the period as follows: The predetermined overhead rate is computed before the period begins using a four-step process. The first step is to estimate the total amount of the allocation base (the denominator) that will be required for next period’s estimated level of production. The second step is to estimate the total fixed manufacturing overhead cost for the coming period and the variable manufacturing overhead cost per unit of the allocation base. The third step is to use the cost formula shown below to estimate the total manufacturing overhead cost (the numerator) for the coming period: Y = a + bX where, Y = The estimated total manufacturing overhead cost a = The estimated total fixed manufacturing overhead cost b = The estimated variable manufacturing overhead cost per unit of the allocation base X = The estimated total amount of the allocation base The fourth step is to compute the predetermined overhead rate. Notice, the estimated amount of the allocation base is determined before estimating the total manufacturing overhead cost. This needs to be done because total manufacturing overhead cost includes variable overhead costs that depend on the amount of the allocation base. The Need for a Predetermined Rate Instead of using a predetermined rate based on estimates, why not base the overhead rate on the actual total manufacturing overhead cost and the actual total amount of the allocation base incurred on a monthly, quarterly, or annual basis? If an actual rate is computed monthly or quarterly, seasonal factors in overhead costs or in the allocation base can produce fluctuations in the overhead rate. For example, the costs of heating and cooling a factory in Illinois will be highest in the winter and summer months and lowest in the spring and fall. If the overhead rate is recomputed at the end of each month or each quarter based on actual costs and activity, the overhead rate would go up in the winter and summer and down in the spring and fall. As a result, two identical jobs, one completed in the winter and one completed in the spring, would be assigned different manufacturing overhead costs. Many managers believe that such fluctuations in product costs serve no useful purpose. To avoid such fluctuations, actual overhead rates could be computed on an annual or less-frequent basis. However, if the overhead rate is computed annually based on the actual costs and activity for the year, the manufacturing overhead assigned to any particular job would not be known until the end of the year. predetermined overhead rate, cost driver, fixed overhead, variable overhead Raw materials, work in process, finished goods, cost of goods manufactured, manufactured overhead cost Cost of goods manufactured Underapplied, overapplied, Job order costing, Direct cost, indirect cost, common cost, manufacturing overhead cost, indirect material, job cost sheet, job number, subsidiary ledger, material requisition form, bill of materials, time ticket, allocation base
Do You Really Know How Much Your Product Costs? You May be Surprised! ~ FASt Pointers
 
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Do you know where your company's profits are coming from, what products actually make money, and if your strategy is geared towards maximizing profit? In this video, we will be learning steps to get greater visibility of your product cost and help you maximize your business profitable growth. Let's get started! Want to learn more about this topic? Read our full blog here: http://www.fas-accountingsolutions.com/blog.do?id=1024226142 ~~~~~~~~~~~ Need bookkeeping and tax preparation help? Email us: [email protected] or Visit our website: ow.ly/mtqx30iioul ~~~~~~~~~~ Product Costing and Product Profitability - What is Product Costing? Product costing is a method to capture and accumulate the full cost of producing a product and service and therefore correctly determine its profitability. The difference between the revenue received from selling our products and its cost is our profitability. Although, it may sound simple, there are many costs in a company that are not directly identifiable to a specific product, but still need to be considered. For example, cost of wear and tear (or depreciation) of a machine that you use to produce the product. And so the question is how you add that machine depreciation expense to see the true cost and real profit of your products. Well, that is what product costing is all about. - How do you know if your product is profitable? Let's start by defining what product profitability is and why it's so critical to a business' success. If you think about your company’s revenue and the cost you incurred and paid which you have to deduct from your revenue to know your profitability, Some of the costs are for production purposes while some are not. Other costs such as rent, salaries of office employees cannot be tied back to your products. So, that triggers the question of what is your true product profitability? Is it what you have left once you have deducted product-related costs? Or should you count in all the other indirect costs as well? Let's take a simple example to answer that question. Let's imagine you have a coffee shop business. You sell one medium size cup of coffee for $5.00. Then your product profitability could be that $5.00 minus the total cost of coffee ground beans, milk, lid, cup, and the wages of the barista making the coffee. You might conclude that you're left with $3.00 and that this is your product profitability. Then, the question is, who is going to pay for your store rent, utilities, bookkeeping, and the cashier’s wages? Of course, its your company, who else? So, your product does not only need to generate enough money to pay for itself, but it also needs to pay for the rest of your operations. So, the true definition of product profitability is what money you have left after covering ALL your costs, from product-related costs to your salary, to any other costs the company has to incur. - What are DIRECT VARIABLE COSTS? Direct means that these are the costs directly identifiable to producing the product. The word variable here is very important, because variable cost behaves the same way as your revenue, meaning, the more you produce, the higher your variable cost, the less you produce, the less your variable cost is. - What are DIRECT FIXED COSTS? Direct costs can be easily identifiable to your product. This is different from indirect costs say, rent, utilities, bookkeeping fees, or other costs needed to run your business. - What are INDIRECT FIXED COSTS? Indirect fixed costs are costs incurred to run your business. Those are costs such as rent, salaries, marketing program, bookkeeping fee, and so on. If you are unsure on the direct or indirect nature of a cost, don’t hesitate to consult with your bookkeeper or part-time CFO. - PRODUCT COST ALLOCATION Let's consider store rent in our coffee shop example, which has no link at all to any products in particular. You can establish a method for allocating the indirect fixed costs (either as a percentage of the revenue of each product or some other method that will be acceptable and consistently applied in your company). Consult with your bookkeeper to obtain guidance on the best allocation method for your company. If you think that product costing will help your company achieve a profitable growth, we can help you. You can reach me at [email protected]
Lecture 4: Difference Between Direct Cost & Indirect Cost-CMA,CS,CA Videos
 
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Lecture 4: Difference Between Direct Cost & Indirect Cost-CMA,CS,CA Videos For More updates about CA CMA Cs courses http://www.allyouthclub.com Direct Cost: 1.Those costs which are directly identifiable and has direct relation with the finished product are called direct cost. 2.These costs are form part of the prime cost of the product. E.g. Direct material cost, direct labour cost, direct expenses(Royalty on production) etc. Indirect Cost Those costs which cannot be directly identifiable and allocable in relation to a particular product are called indirect costs or in other words these are called Overhead. These cost are not form part of production
Views: 124 Chanu SK
Are Variable Costs The Same As Direct Costs?
 
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Are direct costs fixed and indirect variable? Can be variable cost vs actuarial outpost. Are direct labor & material variable expenses? Difference between fixed cost and (with example the difference costs indirect vs. Direct costs and variable cost investopedia. For example, variable 14 may 2011 classifying costs as direct or indirect cost is one way of on the basis their behaviour fixed just then irrespective activity level they will be paid same amount every month this similar to but not expenses. You can have a salaried sales person, which is fixed cost, but an acquisition 27 nov 2016 the relationship of direct & indirect costs with variable makes it cost at same time power cannot be your company's material expenses are consumable things meaning will regardless whether 17 apr 2015 there many differences between and cos expenses, production overhead, selling now, remains in per unit, changes total 28 aug 2017 examples labor, materials, tend to costs, while more likely 19 jun salaries frequently. Variable cost the strategic cfo. Variable vs fixed costs the strategic cfo. Examples of variable costs include direct labor and materials. Variable costs include direct labor, materials, and 24 jul 2013 understand the difference between variable vs fixed. Relationship of direct & indirect costs with fixed variable. Since the supervisor's salary is likely to be same amount each month regardless of variable costs are that change in proportion good or service a business however, not all direct. Only when the machine is down then it will be required same as oil etc variable costs are that change based on amount of business you generally between fixed and costs, with cost being manufacturing may classified direct indirect basis most but this not always case 1 aug 2017 paid to workers for every unit completed (note labor frequently a cost, since minimum number 5 2014 i don t think either there many examples like overhead sales moving goods from one place another 16 jun result, raw materials. Do you think that all variable costs are direct? Bayt and indirect product pricing the balance. What are variable or direct costs and what do they mean to your indirect defined examples of accountingtools. Also called direct expense, on cost, variable or they expenses are recorded at the same time that associated sunk costmixed costindirect costDirect costs and cost investopedia. What is a cost? an expense? Ucla anderson school of. Variable costs can include direct material or labor product such as raw materials are variable. Variable expenses increase as additional units of a product or service 24 jul 2013 fixed costs include various indirect and manufacturing overhead. Indirect costs classifying business expenses. The same regardless of how much the product is manufactured, so it a fixed cost as general rule, most costs are in short run and variable long. Direct costs and variable 15 apr 2015 learn about direct costs, how employees' salaries are the same every year, n
Views: 28 Bet My Bet
Manufacturing Overhead
 
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This video discusses Manufacturing Overhead. There are 3 types of manufacturing costs: Direct Materials, Direct Labor, and Manufacturing Overhead. Manufacturing Overhead is any type of manufacturing cost that is NOT included in Direct Materials and is NOT included in Direct Labor. Thus, examples of Manufacturing Overhead are indirect materials (e.g., some glue used to build a desk), indirect labor (the salary of a security guard at a factory), depreciation expense for the factory building or factory equipment, insurance on the factory, utilities for the factory, etc. What each of these costs have in common is that they are NOT directly traceable to the final product. Edspira is your source for business and financial education. To view the entire video library for free, visit http://www.Edspira.com To like Edspira on Facebook, visit https://www.facebook.com/Edspira To sign up for the newsletter, visit http://Edspira.com/register-for-newsletter Edspira is the creation of Michael McLaughlin, who went from teenage homelessness to a PhD. The goal of Michael's life is to increase access to education so all people can achieve their dreams. To learn more about Michael's story, visit http://www.MichaelMcLaughlin.com To follow Michael on Twitter, visit https://twitter.com/Prof_McLaughlin To follow Michael on Facebook, visit https://www.facebook.com/Prof.Michael.McLaughlin
Views: 775 Edspira
Managerial Acctg - Cost Clasifications
 
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In this video I explain fixed, variable, direct, indirect, product, and period costs. I also explain direct materials, direct labor, and overhead as well as prime costs and conversion costs.
Views: 2165 mattfisher64
Activity Based Costing Examples - Managerial Accounting video
 
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Activity Based Costing Example - Accounting video by TheAccountingDr is a tutorial video with examples on using an activity-based costing system: 1) calculate the allocation rate and 2) allocated costs (overhead/indirect costs) using the allocation rate. In addition, we calculate the indirect costs per unit of planned products as well as the product costs per unit of planned products (direct materials + direct labor + OH). Managerial Accounting lecture notes: http://tiny.cc/nw1enw Activity-Based Costing terminology review game: http://tiny.cc/mxgoow -- Thank you all for your wonderful support. Because of your support we have been able to reach and help numerous accounting students. Please continue to be a part of our mission to help other accounting students be successful by giving our videos thumbs up, giving comments and adding our videos to your favorites. Subscribe: http://www.youtube.com/subscription_center?add_user=routhwsuedu Friend me on Facebook and post your questions: http://www.facebook.com/TheAccountingDoctor -- For more accounting/how to eLectures (and accompanying lecture notes) similar to Activity-Based Costing Examples - Managerial Accounting video, blog, FAQs and accounting eBooks visit http://www.TheAccountingDr.com. Activity-Based Costing Examples - Managerial Accounting video: http://youtu.be/7SNjEHIYjns -- Please note that videos may require Flash media and may not play on devices without Flash capabilities (i.e. iPad). If you are having difficulty viewing this video on YouTube, these videos may also be viewed without Flash on my website at http://www.TheAccountingDr.com.

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