RSM222H1 Chapter Notes - Chapter 2-3: Planning Horizon, Opportunity Cost, Scatter Plot
Document Summary
Costs need to be estimated and aggregated differently for different purposes. Most direct costs are variable, but not all costs. Indirect materials included in part of manufacturing overhead o. Materials used to support the production process. Treated differently because the costs of directly tracing them to the finished products exceed the benefits of doing so. Direct labour: direct labour consists of labour costs that can be easily traced to individual units of product (ex. assembly line workers in a plant) Aka touch labour: indirect labour labour costs that cannot be physically traced to creation of products, or that can only be traced at great cost and inconvenience. Wages paid to employees who are not directly involved in production of work. Manufacturing overhead: manufacturing overhead all costs of manufacturing except direct materials and direct labour, cannot be traced directly to specific units produced o.
