The elements of cost of production (components of cost of production) are materials, labor, and manufacturing overhead, these are the components that supply the information necessary for measuring income and pricing the product.
1. The materials
They are the main resources used in production; These are transformed into finished goods with the help of labor and manufacturing overhead.
1.1. Direct
They are all those that can be identified in the manufacture of a finished product, are easily associated with it and represent the main cost of materials in the elaboration of a product.
1.2. Indirect
They are those who are involved in the elaboration of a product, but have a relative relevance compared to direct ones.
2. The labor
It is the physical or mental effort used to make a product.
2.1. Direct
It is the one directly involved in the manufacture of a finished product that can be associated with it easily and that has a great cost in the elaboration.
2.2. Hint
It is one that does not have a significant cost at the time of product production.
3. Indirect Manufacturing Costs (CIF)
They are all those costs that accumulate from indirect materials and labor plus all those incurred in production but that at the time of obtaining the cost of the finished product are not easily identifiable directly with it.
