RSM222H1 Chapter Notes - Chapter 2: Operations Management, Employee Benefits, Income Statement
Document Summary
Categories of manufacturing costs: direct materials, direct labour, manufacturing overhead. Employee benefits (taxes, health insurance, pension etc. ) Materials that become an integral part of a finished product and can be physically and conveniently traced to it. For e. g. seats that bombardier ses for its subways. Finished product of one company could be the raw material for another: direct materials. Small items of material that may become an integral part of the finished product. But the cost of tracing these materials exceeds the benefit of tracing them. For e. g. the glue used to make nike shoes. Labour costs that can be easily traced to individual units of product. For e. g labour costs of assembly line workers at audi. Labour costs that cant be physically traced to the creation of products. They can be traced but the cost of tracing them is > the benefit of tracing them. Part of manufacturing overhead for e. g. janitor working in a factory.
