1 THE THREE MAJOR ELEMENTS OF PRODUCT COSTS IN A MANUFACTURING COMPA...

2-1 The three major elements of product

costs in a manufacturing company are direct

sells finished goods that it has purchased from a

materials, direct labor, and manufacturing over-

supplier. These goods are listed as “Purchases”

head.

in the cost of goods sold section. Since the

manufacturing company produces its goods

rather than buying them from a supplier, it lists