Professional Documents
Culture Documents
Chapter 19
Chapter 19
Chapter 19
Management Accounting
Chapter 19
The Functions of
Management
Planning Acting Controlling
Feedback
Objective 1
Customer
Marketing Distribution
Services
S19-3
Objective 3
Full
Full Inventoriable
Inventoriable
product
product product
product
costs
costs costs
costs
External Reporting
Inventoriable
Inventoriable
Period
Period
product
product costs
costs
costs
costs
Inventoriable Product Costs
• For external reporting,
merchandisers’ inventoriable product
costs include only costs that are
incurred in the purchase of goods.
• Inventoriable costs are an asset.
• Period costs flow as expenses
directly to the income statement.
Inventoriable Product Costs
• For external reporting, manufacturers’
inventoriable product costs include raw
materials plus all other costs incurred in the
manufacturing process.
• Inventoriable product costs are incurred
only in the third element of the value chain.
• Costs incurred in other elements of the
value chain are period costs.
Inventoriable Product Costs
Direct Direct Indirect Indirect
Other
Materials Labor Labor Materials
Manufacturing Overhead
Inventoriable Product Costs
Direct Direct
Materials Labor
• Kendall Manufacturing
Company had sales of
$627,000 for the period.
• How much is the gross margin?
Sales $627,000
– Cost of goods sold 327,000
= Gross margin $300,000
Manufacturing Company Example
• Kendall Manufacturing Company
had operating expenses as follows:
• $80,000 Sales salaries 10,000
Delivery expense
30,000 Administrative expenses
$120,000 Total
• What is Kendall’s operating income?
Manufacturing Company
Example
Competence Integrity
Confidentiality Objectivity
End of Chapter 19