3/28/2024 0 Comments Factory![]() ![]() Manufacturing overhead is typically assigned to individual units of production, based on a rational and consistently-applied allocation methodology. Manufacturing overhead can include, but is not limited to, equipment depreciation, equipment maintenance, factory rent, factory utilities, materials handling staff wages, production supplies, quality assurance staff wages, and supervisor salaries. ![]() This category is comprised of all the costs incurred that are needed to run a factory, but which are not associated with a specific unit of inventory. For example, if a production worker is paid a piece-rate wage for each unit manufactured, this can be considered a direct labor cost. Only in cases where labor costs can be specifically associated with a particular unit of production should costs be considered direct labor. This category of cost has been called into question, since most production labor is actually needed to provide a minimal level of staffing to the production area, and so should really be considered an overhead cost. This is the cost of labor directly associated with the production of goods.
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