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10 янв 2017 ... You learn gross margin is important because, every company has to earn enough gross margin to pay for all of the company's non-manufacturing overhead costs, such as marketing, administration, legal and so on. If a company does not have enough gross margin, it will not survive – long-term. However ...

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Example. Classify the following costs as either M: manufacturing (DM: direct materials, DL: direct labor, FOH: factory overhead) or N: non-manufacturing (SE: selling expense, GE: general expense).

Some examples of manufacturing overhead expenses include: Indirect material - Welding rods, glues, and product wrappers. Indirect labor – Salary for the maintenance staff, technical support staff, etc.

Learning objectives of this article

For example wood is a direct material for the manufacturers of furniture.

Examples of non-manufacturing costs include

Factory overhead is any manufacturing cost that is not direct materials or direct labor. Factory overhead can have variable or fixed nature, depending on whether overhead changes in direct proportion with production volumes. The following are some examples of factory overhead costs

Any overhead incurred after the product has been produced or outside the factory is a non-manufacturing overhead.

Any supplies involved in manufacture and not directly related to the product being manufactured are examples of overhead.

Manufacturing overhead, however, consists of indirect factory-related costs and as such must be divided up and allocated to each unit produced. For example, the property tax on a factory building is part of manufacturing overhead.

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