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12 July, 13:53

LO 2.2Identify and describe the three types of product costs in a manufacturing firm.

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  1. 12 July, 15:56
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    The sum total of all the costs of all the resources used in the manufacturing a product is called manufacturing cost.

    It is divided into three categories: Direct labour cost, Direct materials cost and manufacturing overhead.

    The materials that become part of a finished product is called direct material cost. The value is added to the raw materials after applying chain of operations.

    The money paid to the workers to manufacture a product from raw material is called direct labour cost.

    Indirect manufacturing is neither direct labour or direct materials cost. It included all the various types of charges such as property insurance, land rent and transportation charges.
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