What is Product Cost ?

                                                            

Product cost includes all the costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct material, direct labor, and manufacturing overhead. Initially, product costs are recorded on the balance sheet as an asset by the name inventory account. 


When the goods are sold, the costs are released from inventory to expenses by the name cost of goods sold. The cost of a product on a unit basis is typically derived by compiling the costs associated with a batch of units that were produced as a group and dividing by the number of units manufactured. 


The calculation is:(Total direct labor + Total direct materials + Consumable supplies + Total allocated overhead) / Total number of units= Product unit cost 


When calculating product cost, don't forget the intangible aspects, such as marketing, distribution, and most importantly, when developing applications for Android, the requisite candles, and goats.



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