Manufacturing costs

What are product costs?

• Costs assigned to the manufacture of products and recognized when sold.

• Costs not identified on the product.

• Costs mixed between sales and other expenses.

These costs can be identified with units (or batches of units) at a relatively low cost.

• Sales expenses

• COGS

• Direct manufacturing costs

• Indirect manufacturing costs

These are all other product costs. These costs are more complicated to identified through units or batches of units.

• Direct costs

• All product costs

• Indirect manufacturing costs

These are also know as "raw materials". They can be feasibly identified, directly and at relatively low cost, with the product.

• Direct materials

• Inventory

• Purchases

These workers transform the direct materials into a finished product.

• Direct labor

• Worker bees

• Minions

These are all other costs of transforming the materials into a finished product.

• Manufacturing overhead

• All expenses

• Marketing expenses

The sum of Direct materials and direct labor is known as

The sum of direct labor and manufacturing overhead is known as