2 Cost Terms, Concepts and Classifications Chapter  identified with products produced  added to the cost of inventory  identified with a period of time  recorded as an expense when products are sold  recorded as an expense immediately  selling and administrative expenses Product CostsPeriod Costs

Prime Costs Conversion Costs Direct Materials Direct Labor Manufacturing Overhead General Cost Classifications Manufacturing (Product) Costs

Rainbow Pharmaceuticals Company Topeka Plant Frankfort Plant Annapolis Plant PhisicorClarizac Lansing Plant Company president’s salary Corporate overhead Plant manager’s salary Plant maintenance Plant utilities DM DL DM DL Direct and Indirect Costs

Appendix 2A: Special Labor Costs Idle Time Overtime Premium Labor Fringe Benefits

Appendix 2B: Cost of Quality Prevention Costs Appraisal Costs Internal Failure Costs External Failure Costs % conformance Cost Total cost