What is direct materials cost?
Direct materials costs are expenditures for direct materials that are separately and readily traced through manufacturing process to finished goods. Ex. of direct materials in manufacturing a mountain bike include its tires, seat, frame, pedals, brakes, cables, gears, and handlebars. Direct labor.
Why are product costs capitalized?
Product costs. Costs that are capitalized because they are expected to have future value. Those costs necessary to create a product and consist of: direct materials, direct labor, and factory overhead. Overhead refers to production costs other than direct materials and direct labor. Product costs are capitalized as inventory during ...
What is Schedule of Cost of Goods Manufactured?
Also called manufacturing statement or a statement of cost of goods manufactured. Schedule of cost of goods manufactured summarizes types and amounts of costs incurred in the manufacturing process. 1.
What is the goal of a lean business model?
Lean business model. Goal is to eliminate waste while "satisfying the customer" and "providing a positive return" to the company. Continuous improvement. Rejects notions of good enough or acceptable and challenges employees and managers to continuously experiment with new and improved business practices.
What is the process of setting goals and making plans to achieve them?
Planning. Process of setting goals and making plans to achieve them. Companies make long-term strategic plans that span 5 to 10 year horizon. Short-term plans translate strategic plan into actions, which are more concrete and consist of better-defined goals.
What is indirect labor?
Indirect labor costs. Refer to costs of workers who assist in or supervise manufacturing. Ex. include costs for employees who maintain and repair manufacturing equipment and salaries of production supervisors. Those workers don't assemble products, though they are indirectly related to production.