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Unformatted text preview: AC 505 James Bowers Course Project - Part A 10 Nov 2009 A manufacturing company such as General Motors makes money by acquiring Raw Materials, converting those materials into Finished Goods, and then selling the Finished Goods to customers. To account for costs associated with the manufacturing process, GM separates these costs into three classifications: Direct materials, Direct labor, and Manufacturing Overhead. Any materials used to create the final product are called Raw Materials. Raw Materials for one company can be the finished product of another. Raw Materials themselves can be classified as Direct (conveniently traced to the finished goods), or Indirect (used in relatively insignificant amounts; will become part of Manufacturing Overhead). For GM, wages of assembly line workers will be treated as Direct Labor costs, since these costs can be easily traced to individual units of product. Conversely, wages paid to employees whose efforts cannot be physically traced to particular products will be designated Indirect Labor. The third component physically traced to particular products will be designated Indirect Labor....
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- Spring '09