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mkjmabrey mkjmabrey
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A month ago
Describe the three major categories of product cost and explain why some raw materials costs and some labor costs are treated as manufacturing overhead.
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Managerial Accounting

Managerial Accounting


Edition: 4th
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Hlh13Hlh13
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A month ago
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The three major categories of product costs are direct materials, direct labor, and manufacturing overhead. Direct materials are those materials that can be directly traced to, or easily identified with, the final product. An example is fabric in shirts, wood in furniture, or milk in ice cream. Direct labor costs are the wages (and possibly benefits) paid to the workers who transform direct materials into a finished product. An example of direct labor is the salary of assembly line workers at a Ford Motor Company plant. Manufacturing overhead costs are indirect product costs that arise in the manufacturing process that cannot easily be traced to a unit of product. Within overhead, indirect labor costs are incurred. They are not considered to be direct labor because they cannot be easily traced to a specific product. Examples might be supervisor salaries, security guard salary, utility costs of the factory or insurance on the factory building.

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mkjmabrey Author
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A month ago
Thanks for your help!!
missnoname
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Yesterday
Good timing, thanks!
jbarnett14
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2 hours ago
Helped a lot
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