Different elements of production cost

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Different elements of production cost

ACCA MA F2 A3c Study Material Different elements of production cost

Costs can be classified by element:

  1. materials

  2. labour

  3. overheads (expenses)

Materials

This includes all costs of materials purchased for production or non-production activities

e.g. raw materials and components.

Labour

This includes all staff costs relating to employees.

Overheads

Overheads include all other costs which are not materials or labour.

These include rent, telephone, and depreciation of equipment.

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