Identify how manufacturing, merchandising, service sector companies differ from each other
Manufacturing companies purchase materials and convert them into various finished goods, merchandising sector companies purchase and sell tangible products without changing their basic form, and service sector companies provide services or intangible products to their consumer
Identify 3 different types of inventory that manufacturing companies hold
direct materials, work-in-process, and finished goods
Distinguish b/w inventoriable costs and product costs
Inventoriable costs are all costs of a product that are considered as assets in the balance sheet when they are incurred and that become cost of goods sold when the product is sold. Period costs are all costs in the income statement other than cost of goods sold. Period costs are treated as expenses of the accounting period in which they are incurred because they are expected to benefit future periods.
Direct Manufacturing Labor Costs
compensation of all manufacturing labor that can be traced to the cost object