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10 June, 19:44

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?

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  1. 10 June, 20:36
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    The answer is b) Standard cost

    Explanation:

    The standard cost that is based on normal efficiency levels, based on budgeted direct and indirect costs. It is a measure of how much it should cost to produce a unit of product. It is made up of the costs of the components required to make said product. For example, the standard cost to produce a leather shoe includes:

    -Cost of direct materials (leather, laces, etc.).

    -Cost direct labor (refers to the time required to cut the design, sew it, etc., multiplied by the production rate of employees who are in the process)

    -Indirect or manufacturing costs related to the product (depreciation of the skin-cutting machine, electricity, etc.)

    Standard costs serve as a benchmark that allows comparison with current costs.
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