This document discusses cost accounting concepts in manufacturing. It explains that manufacturing costs can be divided into three main groups: material costs, labor costs, and manufacturing overheads. Material costs include direct material costs and indirect material costs. Labor costs include direct labor costs and indirect labor costs. Manufacturing overheads include all indirect costs of the manufacturing process excluding direct material and labor costs. The document also outlines additional cost concepts that will be covered in the next class, including fixed and variable costs, prime costs, total manufacturing costs, unit cost, and manufacturing cost calculations.

1. COST ACCOUNTING
BY THE END OF THIS LESSON,YOU WILL BE ABLE TO:
Understand the importance of costing in the manufacturing environment
Know the difference between direct or indirect costs
Identify and calculate various costs concepts in the manufacturing environment

2. MANUFACTURING
Manufacturing is the process of converting raw material to finish product
Process through which something is made
EXAMPLE??

3. MANUFACTURING COSTS
Costs incurred by the manufacturer when converting raw material to finished
products
Costs may be divided into three main groups:
Material costs
Labour costs and
Manufacturing overheads

4. MATERIAL COSTS
Costs of all raw material
Further classified into direct material costs and indirect material costs
EXAMPLE

5. LABOUR COSTS
Costs of labour involved in the manufacturing of product
Further classified into direct labour costs and indirect labour costs
EXAMPLE

6. MANUFACTURING OVERHEADS
• Includes all the costs of manufacturing process that are not directly identifiable with
a specific product.
• Includes all costs of production, excluding direct material costs and direct labour
costs
• Includes all indirect costs such as…….
• EXAMPLE

7. FOR THE NEXT
CLASS…CONTINUATION OF COST
CONCEPTS
• FIXED AND VIARABLE COSTS
• PRIME COSTS
• TOTAL MANUFACTURING COSTS
• UNIT COST
• MANUFACTURING COSTS CALCULATIONS