identified with products produced

1
Product Costs
Period Costs

• identified with products produced

• identified with a period of time

• added to the cost of inventory

• recorded as an expense immediately

• recorded as an expense when products are sold

• selling and administrative expenses

2
Manufacturing (Product) Costs
Direct Materials
Prime Costs
Direct Labor
Conversion Costs
Manufacturing Overhead
3
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4
Direct and Indirect Costs
Rainbow Pharmaceuticals Company

• Company presidents salary

Frankfort Plant

• Corporate overhead

Topeka Plant
Annapolis Plant

• Plant managers salary

• Plant maintenance

• Plant utilities

Phisicor
Clarizac
Lansing Plant

• DM
• DL

• DM
• DL

5
Idle Time
Overtime Premium
Labor Fringe Benefits
6
Prevention Costs
Total cost
Appraisal Costs
Internal Failure Costs
External Failure Costs