11RQ - Horngren'S Financial And Managerial Accounting

Question

What are the three manufacturing costs for a manufacturing company? Describe each.

Step-by-Step Solution

Answer

The three manufacturing costs are direct material, direct labor, and manufacturing overhead.

Definition of manufacturing cost

The manufacturing costs are defined as the cost which is incurred by the business in order to produce the goods.

Three manufacturing costs

The three manufacturing costs for a manufacturing company are as follows:

Direct Material (DM): It refers to the cost of the raw materials which can be converted into finished products.

Direct Labor (DL): It refers to the cost of wages and salaries to the employees who helps in the production process.

Manufacturing overhead (MOH): It refers to the indirect cost of the manufacturing process.