Page 59 - MAZOO EBOOK 1_Neat

The manufacturing industry is an industry that focuses on one business to create products from

semi-finished products to finished products. Following is the features of manufacturing entity:

 Income Comes from Sales

 Have a Physical Inventory

 Manufacturing Activity

 Production Costs Include Raw Material Cost, Labor Cost, and Overhead Cost (h55)

Classification and apportioning costs between manufacturing, selling and administration

Costs can be classified into: (1) Manufacturing cost and (2) Non-manufacturing cost.

Manufacturing cost – refer to those that are spent to transform materials into finished goods.

The total cost of a product or service is basically classified into material cost, labour cost and

expenses as follows:

o Material Cost:

o Labour Cost:

o Factory Overhead Expenses:

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