Manufacturing costs

Manufacturing costs arise during the manufacture or procurement of a product. They include the Material and Production costs that arise in the manufacturing workshop, but generally not administration or sales and marketing costs.

Manufacturing costs include:

• Direct material costs (e.g. blanks, material)
• Indirect material costs (freight, packaging, labour costs e.g. in the Warehouse, operating costs, depreciation, etc.)
• Direct production costs (e.g. piece Work)
• Overheads (e.g. auxiliary labour, remuneration for highly skilled workers, auxiliary materials, energy, factory equipment)
• One-off production costs (e.g. costs for Design plans, patents, models, special tools)

There is an important distinction between manufacturing costs in general and manufacturing costs that are taken into account for tax and balance sheet purposes. The latter can also take into account a certain proportion of administration costs.