Merchandisers . . . Buy finished goods. Sell finished goods. . Manufacturers . . . Buy raw materials. Produce and sell finished goods. Next Page Click Here. MegaLoMart. Comparing Merchandising and Manufacturing Activities. Next Page Click Here. Direct Materials. Direct Labor.
Buy finished goods.
Sell finished goods.
Manufacturers . . .
Buy raw materials.
Produce and sell finished goods.
MegaLoMartComparing Merchandisingand Manufacturing Activities
Click HereDirect Materials
Those materials that becomean integral part of the product andthat can be conveniently traced directly to it.
Example:A radio installed in an automobile
Click HereDirect Labor
Those labor costs that can be easily traced to individual units of product.
Example:Wages paid to automobile assembly workers
Wages paid to employees who are not directly involved in production.Examples: maintenance workers, janitors and security guards.
Materials used to support the production process. Examples:lubricants and cleaning supplies used in the automobile assembly plant.Factory Overhead
Manufacturing costs that cannot be traced directly to specific units produced.
Examples:Indirect labor and indirect materials
Materials waiting to be processed.
Partially complete products – some material, labor, or overhead has been added.
Completed products awaiting sale.Balance Sheet
Click HereThe Income Statement
Cost of goods sold for manufacturers differs only slightly from cost of goods sold for merchandisers.
Click HereManufacturing Cost Flows
Balance Sheet Inventories
Goods in Process
Cost of GoodsSold
Selling andAdministrative Expenses
Click HereProduct Costs – Raw Materials
Beginning inventory is the inventory carried over from the prior period.
Click HereProduct Costs – Direct Materials
As items are removed fromraw materials inventory and placed into theproduction process,they are called direct materials.
Click HereProduct Costs – Total Manufacturing Costs
Conversion costs are costs incurred to convert the direct material into a finished product.
Click HereProduct Costs – Goods in Process
All manufacturing costs incurred during the period are added tothe beginning balance ofgoods in process.
Click HereProduct Costs – Cost of Goods Manufactured
Costs associated with the goods that are completed during the period are transferred to finished goods inventory.
Click HereProduct Costs – Cost of Goods Sold