Describe the flow of product costs for a manufacturer
What will be an ideal response
The flow of product costs for a manufacturer begins with the purchase of raw materials. The manufacturer then uses direct labor and manufacturing overhead to convert these materials into Work-in-Process Inventory. When the manufacturing process is complete, the costs are transferred to Finished Goods Inventory. The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement.
You might also like to view...
A slow collection period indicates slow-turning accounts receivable
Indicate whether the statement is true or false
Complete the following balance sheet using the information given. Round account balances to the nearest
dollar. Balance Sheet Income Statement Cash Sales (All Credit) $20,000 Accounts receivable Cost of goods sold 10,000 Inventory Operating expenses 6,000 Net fixed assets Interest expense 100 Total assets Taxes 1,365 Net income $2,535 Accounts payable Short-term notes payable $1,425 Ratios: Long-term debt Profit Margin = 12.675% Common stock $5,000 Return on Equity = 15% Retained earnings Quick Ratio = 1.2 Total Liabilities and equity Return on Total Assets = 10% Fixed Asset Turnover = 1.6 Current Ratio = 2 Days Sales Outstanding = 45