COST OF SALES =
(Beginning inventory of finished goods + Cost of Production - Ending inventory of finished goods.)
explanation:
Direct material costs are all expenses or expenses for the use of materials that becomepart of the finished
product. For example, a direct material in the cigarette business is:
• Cost of raw materials: tobacco, tobacco paper rollers, sauces, wrapping material.
• Cost of helper / maid: fuel oil, lubricants, water, and electricity used for production.
Direct labor costs are all costs incurred for workers who are directly involved in the manufacture of a product. This is called wage costs (not salaries) because payment is onlybased on the calculation of output, hours, or days of work they provide in the production
process.
Factory overhead is indirect factory costs, ie all expenditure incurred in the plant that can not be connected directly to the manufacturing process. No other factory overhead costsare all costs other than direct materials and direct labor.
The cost of the plant overhhead include:
• Rent a factory fixed assets (building factories, cars, computers, etc.)
• Depreciation, repairs, and maintenance of fixed assets of the factory (the factory building, machinery, equipment,
automobiles, computers, etc.)
• Salary production manager, engineering manager, supervisor, secretary of the activitiesrelated
to production, etc..
• general and
administrative costs the plant (office stationery, telephone, cleaning, etc.)
• fixed plant property insurance
• Etc
2:08 AM
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