ADM 2341 Lecture Notes - Lecture 2: Variable Cost, Fixed Cost, Sunk Costs

• School: University of Ottawa
• Department: Administration
• Course: ADM 2341
• Professor: Robert Bergquist

Document Summary

Direct materials: raw materials that become an integral part of the product and that can be conveniently traced directly to it. Those labour costs that can be easily traced to individual units of product. Wages paid to the assembly team: manufacturing costs that cannot be easily traced directly to specific units produced. Wages paid to employees not directly involved in production work (maintenance, janitors, and security guards) and materials used to support the production process (lubricants, and cleaning supplies used in the plant) Prime cost: direct materials and direct labour. Conversion cost: direct labour and manufacturing overhead. Overtime premiums: all factory workers are usually considered to be part of manufacturing overhead. Product specific overtime premiums are part of direct labour. Marketing or selling cost: costs necessary to get the order and deliver the product. Administrative cost: all executive, organizational and clerical costs. Product costs: direct materials, direct labour, and manufacturing overhead.