Direct Cost:These are all those costs which directly related and allocatable to manufacturing of units of products like direct material (raw meterial), Direct labor (Salaries or wages of workforce) etc.Indirect Cost:These are those costs which are not directly allocatable to manufacturing of units of products like salary of line manager in factory or supervisors salary etc.
in a factory that produces personal computers, standard costs are often used for direct materials, direct labor, and variable overhead, at the unit level. Resource usage that can be traced exactly to what is to be produced is referred to as direct.
Predetermined overhead rate based on direct labor cost = Budgeted overhead cost / direct labor cost / 100 Predetermined overhead rate based on direct labor cost = budgeted overhead cost / direct labor hours.
work in process
Yes. True.
Direct labor is not part of factory overhead while indirect labor is part of overhead as these labor expenses could not be calculated directly like factory supervisor salary or line manager salary etc.
Prime cost = direct materials + direct laborwhile conversion cost = direct labor + factory overhead( which includes indirect materials, indirect labor and other indirect costs
Direct Cost:These are all those costs which directly related and allocatable to manufacturing of units of products like direct material (raw meterial), Direct labor (Salaries or wages of workforce) etc.Indirect Cost:These are those costs which are not directly allocatable to manufacturing of units of products like salary of line manager in factory or supervisors salary etc.
Factory direct labor is that workforce which is directly involve in production of goods like daily wages workers or skilled labor etc.
Salaries and wages of workers directly involve in goods manufacturing is direct labor cost.
The two categories of cost comprising conversion costs are direct labor and factory overhead
Direct labor cost is that labor which directly related with manufacturing of products like machine workers etc while indirect labor cost is that labor cost which directly not manufacturing product but required as well like line mangers or factory supervisors salary etc.
direct labor
debit factory overhead, credit wages payable
Direct Material Direct Labor direct Factory Overhead
Direct labor are not part of overhead costs and shown separately while indirect labor are part of overhead costs and included in overhead cost because those labor cannot be allocated separately or identifiable separately.
To take advantage of lower labor costs