Manufacturing consists of activities and processes that convert raw materials into finished goods. Manufacturing costs typically includes: a) manufacturing facility capital investments; b) raw material and energy purchases; c) fixed and variable operations and maintenance costs including labor; d) financing costs, and e) taxes.
Manufacturing cost pertains to the cost of manufacturing a product. This pertains to the direct costs associated in the production process and should not be confused with other period costs.
Direct Materials Used + Direct Labor +Total Manufacturing Overhead =Total Manufacturing Costs
Direct materials are the actual physical materials that need to be purchased, refined and consumed to make the product.
Direct labor cost can be defined as the cost of workers who can be easily identified with the unit of production. Types of labor who are considered to be part of the direct labor cost are the assembly workers on an assembly line.
Firm Overhead Cost: This is everything from the electricity to the maintenance and depreciation of equipment.
What is Total Manufacturing Cost?
