Manufacturing Costs
• The process of manufacture involves transforming materials into finished goods by applying labour and capital employed in a plant and equipment

• Manufacturing cost comprises three elements:
– Direct Materials
• Includes the cost of all materials that become part of finished product
– Eg: Iron ore to make steel; wood to make furniture etc.
• Cost inclues the purchase price of materials plus other costs such as frieght, insurance, taxes etc
– Direct Labour
• Represents the cost of workers directly involved in producing the product
– Eg: Carpenter who make furniture; worker who assemble cars
• Includes wages, fringe benefits, payroll taxes,bonus etc

Manufacturing Costs
– Direct Manufacturing overhead
• Comprises of all other manufacturing costs besides direct material and labour cost

• Important components are:
– Indirect Materials (Glues, Screw, and tape etc)
– Indirect Labour (Supervisory, Maintenance and......

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Title: Costing Classification
Approximate Word Count: 763
Approximate Pages: 4 (250 words per double-spaced page)

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