Describe the three major categories of product cost and explain why some raw materials costs and some labor costs are treated as manufacturing overhead.

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Quizplus · Accepted Answer

The three major categories of product cost are direct materials, direct labor, and manufacturing overhead. Some raw materials costs and some labor costs are treated as manufacturing overhead because they are not easily traceable to a specific product. For example, the cost of glue used in the production process may be difficult to allocate to a specific product, so it would be included in manufacturing overhead costs. Similarly, the salary of a factory supervisor who oversees multiple production lines may also be classified as manufacturing overhead.

Describe the Three Major Categories of Product Cost and Explain