Question

You are a member of a team auditing Crafted Furniture, LLC. The new purchasing manager has a retail background and is curious as to what the auditors mean by the classifications of manufacturing costs. Your supervisor assigns you to prepare a memo explaining the classifications of direct materials, direct labor, and overhead costs.

Type your communication in the response area below.

REMINDER: Your response will be graded for both technical content and writing skills. Technical content will be evaluated for information that is helpful to the intended reader and clearly relevant to the issue. Writing skills will be evaluated for development, organization, and the appropriate expression of ideas in professional correspondence. Use a standard business memo or letter format with a clear beginning, middle, and end. Do not convey information in the form of a table, bullet point list, or other abbreviated presentation.

To: Crafted Furniture, LLC

Re: Manufacturing Cost Elements

Answer 1

Answer:

Date:19/10/2019

To:Crafted Furniture,LLC

From : Your Name

Subject:Manufacturing Cost elements

I am writing to inform you regarding classification of manufacturing cost elements,so basically there are three elements of manufacturing cost,direct material,direct labor and overhead cost,

So direct material is the cost of raw material and component used to create the product,

direct labor means employee or worker who are directly involved in the production of goods,

Overhead cost means all the indirect cost incurred during the process of manufacturing of product such as depreciation on manufacturing equipment,rent on factory building.