Both job order cost systems and process cost systems track three manufacturing cost elements: direct materials, direct labor, and manufacturing overhead. These cost elements are essential in calculating the total production cost and determining the cost per unit.
Direct Materials: The raw materials directly used in the production of goods.
Direct Labor: The wages of workers who are directly involved in manufacturing the products.
Manufacturing Overhead: Indirect costs associated with production, such as utilities, maintenance, and depreciation of equipment.
References:
"Cost Accounting: A Managerial Emphasis," which details the tracking of manufacturing costs in different costing systems .
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