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Why is it important for manufacturing companies to know the manufacturing cost of each of the...

Why is it important for manufacturing companies to know the manufacturing cost of each of the products they make?

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It important for manufacturing companies to know the manufacturing cost of each of the products they make because:

  • If the manufacturing cost is not known it will not be possible to determine the selling price of the product.
  • Companies exist for profit purpose if the manufacturing cost is not known it will be difficult to determine the profit made.
  • It is important to evaluate the manufacturing cost because if company finds that the materials, labor, or overhead costs appears too high then accordingly actions can be taken.
  • One must also know the manufacturing cost for control purpose.
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