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Manufacturing costs are the costs incurred during the production of a product.
These costs include the costs of direct material , direct labor , and manufacturing overhead .
The costs are typically presented in the income statement as separate line items. An entity
incurs these costs during the production process.
Direct material is the materials used in the construction of a product. Direct labor is that
portion of the labor cost of the production process that is assigned to a unit of production.
Manufacturing overhead costs are applied to units of production based on a variety of
possible allocation systems, such as by direct labor hours or machine hours incurred.
Examples of the types of costs that can be included in manufacturing overhead include:
Salaries and wages for quality assurance, industrial engineering, materials handling,
factory management, and equipment maintenance personnel
Factory utilities
When accounting for inventory, include all manufacturing costs in the costs of work-in-
process and finished goods inventory. (AccountingTools)
they are also referred to as period costs. These costs have two components—selling
Selling costs are costs incurred to obtain customer orders and provide customers with a finished
product. Examples include advertising costs, salaries and commission of sales personnel, storage
costs, shipping and delivery, and customer service. While, costs related to the overall
management of an organization are called general and administrative costs. Examples are:
executive salaries, salaries of administrative staff, accounting expenses, legal expenses, research
and development, and other costs related to general administration of the organization. (Cost
Terminology (lardbucket.org)).
In the discussion forum, my selected company is Coca-Cola Company. The Selling Costs
of the company would be salary and commission for thousands of employees, advertising and
marketing cost, selling and distribution expense. While in the General and Administrative Costs
would be rent of their plants to upkeep it, insurance, utilities, supplies, and expenses related to
management to attributes cost for those products/units responsible for incurring them. As a
government employee in our city government here in the Philippines, we require data’s like
relating to cost of production in various industries so as to decide about the various incentives
Accounting, by reading and understanding the given course and external readings, I have erudite
so many things and always in delight reading the articles submitted in the discussion forum
because I can also find to study the insights of the other students.
REFERENCES:
(AccountingTools)