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List and describe the three types of product costs (Direct Materials,  Direct Labor, Manufacturing Overhead ). Give...

List and describe the three types of product costs (Direct Materials,  Direct Labor, Manufacturing Overhead ). Give an example of each for a furniture manufacturer. Give short answer

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Answer #1

Answer:

Direct Material:

Direct material is Raw material used in production. It is directly attributable to the product.

Example for Furniture manufacturer: Plywood, Nuts, Screws are the direct material use for production.

Direct Labor:

Direct labor is invlove to make the Raw material to Finished goods. The process between raw material and finished goods is done through direct labor.

Example for Furniture manufacturer: Direct wages given to worker for making furniture ready from plywood and other materials.

Manufacturing overhead:

It is not directly attributable to the product whereas it is indirect in nature. In simple terms it is manufacturing cost excluding direct material & direct labor cost.

Example for Furniture manufacturer: Depreciation on machineries that in use for production. like cutter machine.

Factory rent, Electricity used in facotry etc

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