Question
Cost concepts in manufacturing are the costs incurred from turning raw materials into aproduct. These can vary based on the type of product but they
Cost conceptsin manufacturing are the costs incurred from turning raw materials into aproduct.These can vary based on the type of product but they fall into three categories.
Direct Labor
Direct Materials
Manufacturing overhead
Direct labor :Direct laboris "Consists of gross wages paid to those who physically and directly work onthe goods being produced." (Principles of Accounting)
An exampleof this is the salary orwages paid to the individual who works in a plastic bag factory producing plastic bags. It isanyone who helps create the product
Direct materials:The cost of all materials that are an integral part of a finished product and that have a physical presence that is readily traced to that finished product.
Examplesfor a computer maker include the plastic housing of a computer, the face of the monitor screen, the circuit boards within the machine, and so forth.
Minor materials such as solder, tiny strands of wire, and the like, while important to the production process, are not cost effective to trace to individual finished units.
ow are the 3 principal components of product cost allocated (your estimated percentage) in a manufactured product you may use (estimate the percentages for the 3 components)?Have purchased? Or are familiar with?
Please identify the specific product or service in your subject line.
Your estimates?DM: ___%DL: ____%MOH: ____%(should total to 100%)
Since earlier times in manufacturing technology (1980) through our present times, the importance of direct labor has decreased ... and that trend will continue.
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