Question

We have learned about the components that make up the manufacturing costs also known as products costs (direct materials, direct labor, manufacturing overhead, and/or conversion costs). Of all the components that make up the manufacturing costs, which one do you think is most important and why?

Please answer is 1 paragraph. (7-8 thorough sentences.) Include a few details. Thank you and enjoy your day!

Answer 1

According to Cost Point of View

Direct material cost is holding largest proportion in the total cost of the final product , if the company want to control the cost than they have to keep monitoring and analysing direct material cost.

According to Other Point of View

Labour cost can be a important because without it raw material cannot be coverted into finised good or if the compny compromise on labour cost then the final output will be low in quality and standards.

Direct Material Cost

• Direct material cost is known as the cost of raw material, direct material is easily identified in the final product, for example in case furniture industry wood is the direct material and in case of iron industry iron ore is the direct material.

Direct Labour Cost

• Direct labour cost refer's to cost of conversion to raw material into finish product, this conversion include labour cost, Wages cost.
• Direct labour cost are easily identical with the finishshed products, for example wages of labour in a factory is a direct cost and salary paid to office staff is a indirect labour cost which cannot be easily identical in the final product.

Manufacturing overhead

• Manufacturing overhead refer's to all the indirect cost incured or arises during the process, manufacturing cost is known as production cost , factory overhead cost.
• Examples of manufacturing cost -Accountent salary, Sales man salary.

-Repair and maintenance of plant , machinery and facory building.

- Office Supplies.