16. whats the contribution margin? 17. what are the three major types of product costs in a manufacturing…
16. whats the contribution margin? 17. what are the three major types of product costs in a manufacturing company? 18. explain the difference between a product cost and a period cost.
Answer
Explanation:
Step1: Define contribution margin
Contribution margin = Sales - Variable costs
Step2: List major product costs
The three major types of product costs in a manufacturing company are direct materials, direct labor, and manufacturing overhead.
Step3: Differentiate product and period costs
Product costs are costs that are directly associated with the production of goods and are included in the inventory value. They are capitalized and expensed when the product is sold. Period costs are costs that are not directly related to the production of goods, such as selling and administrative expenses. They are expensed in the period in which they are incurred.
Answer:
- Contribution margin = Sales - Variable costs
- Direct materials, direct labor, manufacturing overhead
- Product costs are directly related to production and capitalized until product is sold; period costs are not directly related to production and expensed in the period incurred.