Take a look at the picture above and respond to the following three items. Then use this discussion to make sure you know the three main ingredients that go into the product costs of a manufacturer.

1. Compile a list of costs to make/produce a dress for a clothing manufacturer.
2. Break down your list into categories and provide what you believe are the three main ingredients that go into the product costs of any manufacturer.
3. Why do manufacturers and retailers need to know the cost of the products they sell?

Accounting for the product costs of a manufacturer is more complicated than tracking product costs for a retailer. As you think about the product costs of a retailer (a dress shop, perhaps), do you know why? In this class we will focus on the product costs and accounting cycle of retailers and leave manufacturers to a managerial accounting course.

Manufacturer Retailer Customer