This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Chapter 2 Manufacturing Costs: 3 broad categories: direct material, direct labor, and manufacturing overhead Raw materials are materials that go into the final product. I t refers to any materials that are used in the final product; and the finished product of one company can be the raw material of another company like plastic produced for a personal computer. • Direct Materials: materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product. Examples would be chairs for the bus • I ndirect Materials: are included as part of manufacturing overhead and are minor items that aren’t worth the effort to trace the costs like glue to make a chair Direct Labor: labor costs that can be easily (i.e. physically and conveniently) traced to individual units of product. Also sometimes called touch labor since direct labors typically touch the product while it is being made. Examples would be assembly line workers or carpenters •...
View Full Document
This note was uploaded on 02/02/2010 for the course BCOR 2000 at Colorado.