Nature of cost concepts for material Labour and overheads

Question 1

Materials Def

Answer 1

Materials are what goes into making the product, they can be direct or indirect materials

Question 2

Direct Materials Def

Answer 2

Those which can be traceable to the product being made.

Question 3

Indirect Materials Def

Answer 3

Those that cannot be traced to a particular unit of production , they form part of the manufacturing overhead.

Question 4

Labour Costs Def

Answer 4

Cost paid to employees that are wages, salaries, sick leave pay etc.

Question 5

Manufacturing Overheads Def

Answer 5

Costs which are not direct Labour or direct materials but are still part of the manufacturing process. These costs are indirectly connected to finished goods and are sometimes called factory overheads.