solve only Group 4,5&6

1. List examples of manufacturing and non-manufacturing costs for the following manufacturing companies (One product was chosen per company). DM (2 or more), DL (1 or more if applicable), MO (3 or more); Non-Manufacturing (3 or more). You can follow the example found in page 30 of the open textbook "Table 1.2 - Manufacturing Costs at Custom Furniture Company". Hewlett-packard - printers KDD - cream Groups 1, 2 & Nike - training shoes 3 General Electric - washing machine Almarai - Chocolate milk Groups 4, 5 & Fine - Tissue box 6 Toshiba - Laptop Kuwait Flour Mills - Hamburger bun Groups 7, 8 & Al Alali - Ketchup 9 List any references used at the end of the document.l Zain KW LTE 6:03 PM 19% 0 resources.saylor.org than processing checks, invoices, and payroll-then a low-end ERP system might be appropriate. However, the benefits derived from such a system must outweigh the costs. Saylor URL: http://www.saylor.org/books Saylor.org 27 1.6 Cost Terminology LEARNING OBJECTIVE 1. Understand the terms used for costing purposes. Question: Much of what we discuss in this book relates to companies that manufacture products, such as Nike and Apple, and terminology is a key component of accounting for manufacturing companies. The challenge is in classifying costs correctly for items such as production materials, production labor, marketing department labor, rent for production facilities, and rent for the administrative services facilities. These costs must be classified accurately so that they appear correctly in company financial reports. The starting point for learning how to classify costs correctly is in understanding two broad categories of costs. What are the two broad terms used to categorize cost information in a manufacturing setting? Answer: The two broad categories of costs are manufacturing costs andnonmanufacturing costs. Each category is described in detail as follows. Manufacturing Costs All costs related to the production of goods are called manufacturing costs; they are also referred to as product costs. A manufacturer purchases materials, employs workers who use the materials to assemble the goods, provides a building where the materials are stored and goods are assembled, and sells the goods. We classify the costs associated with these activities into three categories: direct materials, direct labor, and manufacturing overhead. To help clarify which costs are included in these three categories, let's look at a furniture company that specializes in building custom wood tables called Custom Furniture Company. Each table is unique and built to customer specifications for use in homes (coffee tables and dining room tables) and offices (boardroom and meeting room tables). The sales price of each table varies significantly, from $1,000 to more than $30,000. Figure 1.4 "Direct Materials, Direct Labor, and Manufacturing Overhead at Custom Furniture Company" shows examples of production activities at Custom Furniture Company for each of the three categories (we continue Saylor URL: http:/www.saylor.org/books Saylor.org 28 using this company as an example in Chapter 2 "How Is Job Costing Used to Track Production Costs?").l Zain KW LTE 6:03 PM 19% resources.saylor.org Saylor URL: http://www.saylor.org/books Saylor.org 28 using this company as an example in Chapter 2 "How Is Job Costing Used to Track Production Costs?"). Direct Materials Question: Raw materials used in the production process that are easily traced to the product are called direct materials. What materials used in the production process at Custom Furniture would be classified as direct materials? Answer: The wood used to build tables and the hardware used to attach table legs would be considered direct materials. Small, inexpensive items like glue, nails, and masking tape are typically not included in direct materials because the cost of tracing these items to the product outweighs the benefit of having accurate cost data. These minor types of materials, often calledsupplies or indirect materials, are included in manufacturing overhead, which we define later. Direct Labor Question: Workers who convert materials into a finished product and whose time is easily traced to the product are called direct labor. Who represents direct labor at Custom Furniture? Answer: Direct labor would include the workers who use the wood, hardware, glue, lacquer, and other materials to build tables. Manufacturing Overhead Question: All costs associated with the production process other than direct material costs and direct labor costs are called manufacturing overhead. Terms synonymous with manufacturing overhead include factory overhead, factory burden, and overhead. What items are included in manufacturing overhead? Answer: Manufacturing overhead consists of the following: Indirect material costs. The cost of materials necessary to manufacture a product that are not easily traced to the product or not worth tracing to the product. Saylor URL: http://www.saylor.org/books Saylor.org 29 . Indirect labor costs. The cost of workers who are involved in the production process but whose time cannot easily be traced to the product. For example, supervisors in the production process who oversee several different products and are responsible for hiring employees, scheduling employees, and ordering materials are considered indirect labor..II Zain KW LTE 6203 PM 3 resourcessaylororg Savior URL: Was 30 of 972 I Indirect labor costs. The cost of workers who are involved in the production process but whose time cannot easily be traced to the product. For example, supervisors in the production process who oversee several different products and are responsible for hiring employees, scheduling employees. and ordering materials are considered indirect labor. Other manufacturing costs. These are all other costs for items associated with the factory. including equipment maintenance. insurance. utilities. and depreciation. Table I2 "Manu factoring Costs at Custom Fumiture Company\" provides several examples of manufacturing costs at Custom Fumiture Company by category. Table 1.2 Manufactun Costs at Custom Furniture Corn can Direct Ma lerials 0 Wood: cherry, maple, oak. and mahogany 0 Hardware: drawer handles 0 Workers who cut, plane. and glue wood . Workers who 61] and sand tables . Workers who stain and nish tables Manufacturing Overhead . Indirect materials: glue, screws, nails. sandpaper, stain, and lacquer 0 Indirect labor: factory supervisors 0 Other manufacturing costs: equipment maintenance, equipment depreciation, factory utilities, factory insurance. factory building depreciation, and factory property taxes Note 1.43 "Business in Action 1.5" details the materials. labor. and manufacturing overhead at a company that has been producing boats since I963. Savior URL: httpzawwwswaylorprggbkg Business in Action 1.5