Question

Describe in moderate detail the manufacturing process from requisition to order fulfillment and how costs flow (changes in accounting classification) through the different processes in the cycle.

Answer 1

manufacturing costs are the costs necessary to convert raw materials into products.All the manufacturing costs should be recorded in the units produced for external financial reporting.These units costs are used for inventory valuation on the balance sheet antd to calculate the cogs on the income statement.
   manufacturing cost are classified into three types
1) direct material
2)direct labour
3)factory overhead or manufacturig overhead
1)Direct material: It becomes the part of finished goods.ex:the cost of wood is direct material in the furniture.
2)Direct labour :The cost of wages of the individuals who are physically involved in converting raw materials into finished products.
3)Factory overhead or manufactureing overhead: It refers to all other costs incurred in the maufactureig activity.Factory overhead is also called as indirect manufacturig cost.
Retailers purchase products from other companies and then sell those products in stores through catalogs to their customers or through promoting the products