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Product costs can be classified as one of three types: direct materials,direct labor,or factory overhead.
Factory Overhead
Indirect costs associated with manufacturing, such as rent, utilities, and salaries of supervisors, that cannot be directly traced back to a specific product.
Direct Materials
Components and materials that are directly incorporated into a finished product and are a significant portion of manufacturing costs.
Direct Labor
The wages and related expenses for workers directly involved in the production of goods or the delivery of services.
- Grasp the concept of different costs associated with production—direct materials, direct labor, and overhead—and their effect on determining the cost of goods sold.
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Learning Objectives
- Grasp the concept of different costs associated with production—direct materials, direct labor, and overhead—and their effect on determining the cost of goods sold.
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