Concept explainers
Overhead:
Direct Material Cost:
Direct material cost is the cost that a company incurs while manufacturing a certain product or service. It includes all the cost and expenses that are directly associated with the production such as raw materials.
Direct Labor Cost:
Direct labor cost is the cost that a company incurs in giving wages to the people that are directly associated with the production work.
Selling expenses:
Selling expenses are those expenses that are incurred by the company on selling a particular product or service.
General and administrative expenses:
General and administrative expenses are those expenses that are incurred by the company that are indirectly associated with the production such as admission fees, electricity expenses.
To classify: The statements as direct materials, direct labor, overhead, selling expenses or general and administrative expenses.

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Chapter 14 Solutions
FINANCIAL AND MANAGERIAL ACCOUNTING
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