Financial Education - Physical or mental effort used to manufacture a product

When we talk about labor involved in the manufacturing and cost structure, we refer to the physical or mental effort used to manufacture a product.

Labor involved in the manufacturing and cost structure can be direct, i.e. labor directly involved in the manufacturing of a finished product that can be easily associated with it and that has a high cost in the manufacturing process.

But also the labor involved in the manufacturing and cost structure can be indirect, i.e. that which does not have a significant cost at the time of production of the product.

As for indirect manufacturing costs, they are all those costs that are accumulated from materials and indirect labor plus all those incurred in production but that at the time of obtaining the cost of the finished product are not easily identifiable indirectly with it.

While the cost systems by specific orders, are fundamentally a cost accumulation system according to customer specifications or in some cases to be taken to the finished product warehouse, in which the costs involved in the production process of a specific quantity.