COMM 305 Chapter Notes - Chapter 33: Income Statement, Fixed Cost, Variable Cost
25 Jan 2015
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* define the three classes of manufacturing costs and differentiate between product costs and period costs. Explain how costs are affected by changes in the levels of business activity. Explain the difference between a merchandising income statement and a manufacturing income statement. Explain the difference between a merchandising balance sheet and a manufacturing balance sheet. * manufacturing consists of activities to convert raw materials into finished goods. * merchandising firm sells goods in the form in which they were bought. Can be physically and directly associated with the finished product are called direct materials. Examples include: flour in the baking of bread; syrup in the bottling of soft drinks; steel used in making automobiles. * work of factory employees that can be physically and directly associated with converting raw materials into finished goods is direct labour. Examples include: bottlers at coca-cola; bakers at sara lee; typesetters at a newspaper. * costs indirectly associated with manufacturing of finished goods.
