Friday, June 18, 2010

Cost Flows Manufacturing Company

What are the cost flows of a manufacturing company?

Direct material, direct labor, and manufacturing overhead are all considered types of production costs incurred by manufacturers when they are producing products for resale to the public or other businesses.

These types of costs are considered product costs by an accountant because they are stored in inventory until the manufacturer’s products are sold to a customer for money. Because of this type of inventory system, manufacturers of goods generally employ product-costing systems to keep track of the flow of these costs from the time production begins until finished products are finally sold.

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