BUS 630 Week 2 DQ 1

Direct material direct labor and manufacturing overhead

On financial statements, each product must include the costs of the following:

1. Direct material

2. Direct labor

3. Manufacturing (or factory) overhead

Manufacturing overhead (also known as factory overhead, factory burden, production overhead) involves a company's factory operations. It includes the costs incurred in the factory other than the costs of direct materials and direct labor. This is the reason that manufacturing overhead is often classified as an indirect product cost.

Generally accepted accounting principles require that cost of direct material cost, direct labor, and manufacturing overhead be considered as the cost of products for valuing inventory and for determining the cost of goods sold....