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Bon, the production manager, accepts an order to continue processing the current run of mixer base paint. (a) $27,000.00 worth of materials are withdrawn from Raw Materials inventory. Of this amount, $25,000.00 will be issued to the Mixing Department and the balance will be issued to the maintenance Department to be used on production line machines.

Start studying 18-2A Classifying Costs. Learn vocabulary, terms, and more with flashcards, games, and other study tools. Pens, papers, and other supplies used by the accounting appointment in preparing various annual managerial reports

Product Factory Overhead u Plastic for outside housing of lawn mowers. Product Direct Materials v Steering wheels for lawn mowers. Product Direct Materials w Filter for spray gun used to paint the lawn mowers. Product Direct Materials x Cost of boxes used in

Direct material cost is the cost incurred to procure raw materials. It includes material purchase cost & expenses incurred to bring the material from supplier location to your factory location. Tax paid on purchase, being a input tax credit element, is not included in direct material cost.

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Direct costs can be defined as costs which can be accurately traced to a cost object with little effort. Cost object may be a product, a department, a project, etc. Direct costs typically benefit a single cost object therefore the classification of any cost either as direct or indirect is done by taking the cost object into perspective.

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Direct material purchases included $2,000 of paint and $7,000 of plastic and metal parts. Friends Company also purchased some light bulbs. The $500 of light bulbs purchased was included in the Raw Materials Inventory account, but since the bulbs are not direct materials, they were not recorded as part of the direct materials cost.

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This paint is transferred to Packaging at a standard cost of $10.05 per gallon. (f) Packaging draws $755.00 in raw materials for packaging of this production run. (g) Packaging documents that 12 hours of direct labor at $10.25 per hour were consumed in the packaging of this production run.