Question

What are the three production/manufacturing cost? Provide an example of each cost.

Do you think the costs are equally important or is there one cost more important than the other two? Explain your answer to this question.

Answer 1

THREE MANUFACTURING COST ARE AS FOLLOW:-

1.DIRECT MATERIAL COST- THIS COST IS OF RAW MATERIALS USED IN PRODUCTION OF GOODS. IT IS ALSO KNOW AS RAW MATERAIL COST.

2.DIRECT LABOUR COST-THIS IS THE AMOUNT  WHICH IS PAID TO WORKERS WHO PRODUCES THE GOODS.

3.MANUFACTURING OVERHEAD-ALL COST WHICH ARE RELATED TO MANUFACTURING PROCESS BUT CANNOT DIRECTLY ATTRIBUTE TO DIRECT MATERIAL AND DIRECT LABOUR .

EXAMPLES OF COSTS

1.DIRECT MATERIAL COST- RAW MATERIAL COST

2.DIRECT LABOUR COST-WAGES OF MANUFACTURING DEPARTMENT LABOUR

3.MANUFACTURING OVEHEAD-DEPECIATION ON FACTORY ASSET

I THINK ALL THE COST ARE EQUALLY IMPORTANT BECAUSE TO PRODUCE ANY GOOD YOU NEED A RAW MATERIAL THEN TO WORK ON THEM YOU NEED A LABOUR AND LABOUR CAN WORK WITH THE HELP OF MACHINE,THEY NEED A SPACE FOR WORK AND OTHER THINGS WHICH WILL BE PART OF MANUFACTURING OVERHEAD.THEREFORE,ALL THREE ARE EQUALLY IMPORTANT.