Home Up Contents Search

Product Costing


When we talk about product costs, we are concerned with the value of the resources consumed in producing the product in question. [The same principles apply to service industry organizations. We can determine the cost of medical services or legal advice using the same concepts.]

There are three major categories of resources used in producing a product: direct material, direct labor, and overhead. Material and labor are relatively easy to deal with because they are direct costs. Overhead is an indirect cost and determination of the overhead that should be properly associated with a given product is more difficult. Click here to review the basic definitions of direct and indirect costs. if you are comfortable with your understanding of direct and indirect costs, click on the "Cost Flows & the Cost Accounting Model" hyperlink in the navigation bar below.

Cost Flows & the Cost Accounting Model | Cost Flows & Inventories, Part I | Cost Flows & Inventories, Part II | Cost Flows & the Financial Statements, Part I | Cost Flows & the Financial Statements, Part II

Copyright 2004 Gerald M. Myers. All rights reserved. This site has been developed as aid to instructors and students in managerial accounting. The scenarios contained herein are not intended to reflect effective or ineffective handling of managerial situations. Any resemblance to existing organizations is purely coincidental.
Last modified: August 03, 2005