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ACCT 2102 Ch.2 Notes

by: Jessica Su

ACCT 2102 Ch.2 Notes ACCT 2102

Marketplace > University of Georgia > ACCT 2102 > ACCT 2102 Ch 2 Notes
Jessica Su
GPA 3.8
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About this Document

These notes cover what Professor Farmer mentioned in class, very detailed.
Principles of Managerial Accounting
Amanda farmer
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This 4 page Class Notes was uploaded by Jessica Su on Thursday August 25, 2016. The Class Notes belongs to ACCT 2102 at University of Georgia taught by Amanda farmer in Fall 2016. Since its upload, it has received 32 views.


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Date Created: 08/25/16
● Profit​­ Revenue minus expenses  ○ Increase revenue or decrease expenses can generate more profit  ● Cost​­ similar to expenses, but…  ○ Inventory is a cost, and after a sale is made, it becomes COGS, which is an expense  account   ● Expense­ ​  cost that incurs when generating revenue  ● Three basic business models  ○ Service​: sells purely service, does not hold inventory  ○ Merchandise​: hold inventory  ○ Manufacture​: hold inventory, makes what they sell  ■ Manufacture is the most complicated business model  ○ Inventory affects profit when it was an inventory ­­> COGS (expense) ­­> revenue ­  expense = profit  ● Product cost​­ inventorial cost that will affect profit when it becomes COGS  ○ Period Cost​­ never inventory!! They are expense at the moment they incurred  ● Value Chain​­ links that a business have to incur revenue  ○ Service company doesn’t have this chain  ○ This link is where all product cost is incurred  ○ Research and development ­­> Design ­­> Production and purchase ­­> Marketing (Let  the market knows what we can offer) ­­> Distribution (deliver it to customers) ­­>  Customer Service     Product cost​: any costs that occur to get the product deliver to the customers; ex. Shipping,  insurance, purchase price  ○ Anything happens in production/ factory  ○ Affect the calculation of gross profit, because GP = Revenue ­ COGS, product cost  affects COGS  ● Period cost​: operating costs, selling general administrative expense; ex. Wages, rent  ○ Anything happens not in the factor  ● Direct Cost: ​  stated specifically in the recipe  ○ Direct product costs are both easy and convenient to trace to the cost object  ■ Direct material cost (DM)  ■ Direct labor cost (DL): wages, salaries, retirement benefit, NEVER a  supervisor   ● Think of someone who touches the product that are being made  ○ Ex. One tablespoon of salt  ● Indirect Product Cost​­ MOH, Manufacturing over Head; Ex. rent on the factory, material  used in the factory, supervisor salary   ○ The cost goes up as the factory expands  ○ NOT easy to convenient to tract to the cost object  ○ Ex. A pinch of salt  ○ Do not specifically know how much to use, only stop using until the product is  made         BRM + P ­ ERM = RM used ­ DM (flour) = IM (Indirect Material, a pinch of salt)            DM  80,000  + DL  254,000  + MOH   = Total Product Cost   + BWIP   ­ WIP   = COGM   + BFG   ­ EFG   = COGS     


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