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In: Accounting

define manufacturing cost? define direct materials? define direct labour? define manufacturing overhead? required : Write very...

define manufacturing cost?
define direct materials?
define direct labour?
define manufacturing overhead?

required : Write very briefly

Solutions

Expert Solution

Manufacturing cost is aggregate of all the cost occured in the manufacturing of the product.Thses costs impact the production of the compact and also impact the valuation of the inventory.Thses Costs effects the profit of the business.These are classified further -

Direct Material

Direct Labour

Manufacturing Overhead

Direct Material

Direct Materials are the raw material that used up in the manufacturing of the product.These are the costs that directly effect the production of the company.these cost form an important part of the production so company should take a look towards the prices of the raw material to control the costs of the company

Direct Labour

Theses are wages to the labourer that have contribution in the production of the company.These people help in converting the raw material into the finished produtcs.Thses people should efficient as well as effective in their work to achieve the goals of the company and bring down their cost as more as possible.

Manufacturing Overhead

These are the indirect cost which provides the support to the direct cost in manufacturing process of the company.These cost generally are not traceable but form important part of the production.These Further includes

Indirect Material - These are the extra cost used in the manufacturing of the product such as grease lubricants & Water

Indirect Labour - Theses cost includes salary and wages to the people who donot form part of the production but helps in efficient running of the production.these opeople are generally knowledgeable and helps in the technical process.

Other Manufacturing Cost - These are the cost which donot get covered above but are the expenses of the company e.g Depreciation , transportation and electricity.

ekkarill92 answered 1 year ago
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