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Chapter 5, 6 (7/8)
Income Statement of Service Business
Service Revenue - Operating Expense = Operating Income
Income Statement of Manufacturing/Merchandising Business
Sales Revenue - COGS = Gross Profit
Conversion Costs
Direct Labour and General Factory Overhead Combined
Ex. Wages, Depreciation, Utilities
Prime Costs
Direct/Indirect Material Expenses and Direct Labour Costs
Variable Costs
Expenses that remain constant on a per-unit basis but change in total based on activity level
Type of Manufacturing Costs - Product Costs
Costs associated with production of goods and products, included as part of inventory
Type of Manufacturing Costs - Period Costs
Costs that are not product costs, revenue based on specific period of time, not included in the value of inventory
Manufacturing Overhead/Indirect Costs
Costs that are indirectly associated with the manufacture of the finished product
Note 
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