Acct 2102 Ch 1 In-Class (Cost Classification)

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What is Direct Labor?

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Direct labor refers to the wages paid to workers who are directly involved in the production of goods, such as assembly line workers or machine operators.

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What is Manufacturing Overhead?

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Manufacturing overhead includes all costs associated with manufacturing that are not direct materials or direct labor, such as factory rent, utilities, and salaries of factory supervisors.

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What are Product Costs?

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Product costs are costs that are incurred to create a product and include direct materials, direct labor, and manufacturing overhead.

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What are Period Costs?

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Period costs are costs that are not tied directly to the production of goods and are expensed in the period they are incurred, such as selling and administrative expenses.

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What is a Selling Expense?

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Selling expenses are costs incurred to sell a product, including advertising, sales commissions, and shipping costs.

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What is an Administrative Expense?

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Administrative expenses are costs related to the general administration of the business, such as salaries of executives and office supplies.

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What is Depreciation in manufacturing?

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Depreciation in manufacturing refers to the allocation of the cost of tangible assets, like machinery and equipment, over their useful lives.

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What is the difference between Direct Materials and Direct Labor?

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Direct materials are raw materials that are directly used in the production of a product, while direct labor refers to the labor costs of workers who directly contribute to the manufacturing process.

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What is the role of a Security Guard in a factory?

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A security guard in a factory is considered part of manufacturing overhead, as their wages are not directly tied to the production of goods.

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How do you classify the cost of raw materials used in production?

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The cost of raw materials used in production is classified as Direct Materials.