Asked by Shannon Prince on Mar 10, 2024
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If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of factory overhead cost.
Factory Overhead
Refers to all the indirect manufacturing costs, such as utilities and rent for the production facilities, which are not directly tied to individual products.
Total Product Cost
The full cost incurred to manufacture or acquire a product, including material, labor, and overhead expenses, up to the point of sale.
Materials Cost
The expense incurred for materials that are used in the production of goods or services.
- Understand the classification of manufacturing costs into direct materials, direct labor, and factory overhead.
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Learning Objectives
- Understand the classification of manufacturing costs into direct materials, direct labor, and factory overhead.
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