Tuesday, March 23rd, 1999
Announcements: none

Lecture notes:

b)	Current Assets / Current Liabilities (increase) = decrease
c)	Net Income / Average SE (increase) = decrease
d)	Total Debt (increase) / SE = increase
e)	COGS / Average Inventory = no effect
f)	Current Assets / Current Liabilities = no effect
i)	Net Income / Average Assets (decrease) = increase
l)	Current Assets / Current Liabilities = no effect

a)	Current Assets (increase) / Current Liabilities = increase
b)	COGS (increase) / Average Inventory (decrease) = increase
f)	Net Income / Average SE (decrease) = increase
e)	*make up numbers: CA / CL = 200 / 100 changes to 150 / 50 = increase CA / CL = 75 / 100 changes to 25 / 50 = decrease
g)	Net Income (decrease) / Net Sales = decrease
j)	Current Assets / Current Liabilities = decrease
l)	Net Income / Average Assets (decrease) = increase

• Direct Materials: go into product, significant in value and amount
• Direct Labor: individuals who work on / assemble product, hands-on labor
• Overhead (Manufacturing): any costs other than direct materials and direct labor

Inventory of a Manufacturer consists of:

• Raw Materials: materials that haven't been used
• Work-In Progress (WIP): not completed
• Finished Goods: final, completed products that haven't been sold

Cost of Goods Manufactured (COGM)

Beginning Inventory

+ Direct Materials Added

+ Direct Labor Incurred

+ Factory Overhead

- End WIP

COGM

WIP
Beg Balance Dir Mat Dir Labor Facr Overhead	COGM
End Balance

FINISHED GOODS
Beg Balance COGM	COGS
End Balance

Beginning Finished Goods

+ COGM

COGAS

- End Finished Goods

COGS

Variable Costs: costs that change n total as a result of production changes

Fixed Costs: costs that do not change in total as a result of production changes

Period Costs: any nonmanufacturing costs

Product Costs: manufacturing costs

Page 717, Problem A3

Cost of Material Used
Beg Inventory	55,600
+ Material Purchases	+ 328,000
- End Inventory	- 56,240
	327,360
Factory Overhead
Small Tools	18,240
Factory Insurance	3,690
Factory Utilities	7,410
Dep--Building	16,240
Dep--Equip	12,990
Plant Supr. Salary	16,250
Indirect Labor	81,400
Rep & Maint.	21,200
Misc. Factory Overhead	14,120
Indirect Mat. & Supplies	39,400
Total Factory Overhead	230,940
Direct Labor
194,700
COGM
Beg WIP	44,020
+ Direct Materials	+ 327,360
+ Direct Labor	+ 194,700
+ Factory Overhead	+ 230,940
- End WIP	- 41,900
	755,120
COGS
Beg Finished Goods	39,200
+ COGM	+ 755,120
COGAS	794,320
- End Inventory	- 40,200
	754,120

	X7	X6
Gross Margin	32%	34%
Profit Margin	1.3%	3.9%
Operating Expenses	28.4%	25.6%