Direct Material:
Basic material ingredient to manufacture unit of product is called direct material
Direct Labor:
The basic labor force which is required to make any unit of product and without which it is not possible to make unit of product is called direct labor
prime cost = direct labour cost + direct material cost + direct expenses
No, Conversion cost is the sum of direct labor cost and manufacturing overhead cost.
Some direct expenses include direct labor and materials. Companies try to reduce the cost of direct expenses because they impact the cost of the product.
Pricing is based on direct labor and overhead. Materials does not affect pricing. Example: Your customer provides materials used in production.
Direct labor which do not vary with level of production is fixed direct labor while labor vary with change in production is variable direct labor.
Sum of direct materials and direct labor
Prime cost = direct materials + direct laborwhile conversion cost = direct labor + factory overhead( which includes indirect materials, indirect labor and other indirect costs
add the direct material +( direct labor* time)* nO of worker
prime cost = direct labour cost + direct material cost + direct expenses
B. Direct materials, direct labor, and variable manufacturing overhead.
Total Manufacturing Cost
20
Direct investment is advantageous because labor and raw materials may be cheaper in some countries
No, Conversion cost is the sum of direct labor cost and manufacturing overhead cost.
Direct labor and direct materials are the two main components of prime cost. Another component of prime cost is direct expense.
Some direct expenses include direct labor and materials. Companies try to reduce the cost of direct expenses because they impact the cost of the product.
Pricing is based on direct labor and overhead. Materials does not affect pricing. Example: Your customer provides materials used in production.