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Why is manufacturing overhead considered an indirect cost of a unit of product? Are there any situations where this could be considered a direct cost of a unit of product and if so, how? Explain.
Asked by: usc-fun 111 views General Questions
1. Over the past few decades, the cost structure of manufacturing companies has shifted. In the early 1900s, direct material costs were substantial while fixed costs represented a small fraction of total manufacturing costs. However, the cost structure has reversed and now fixed costs make up the majority of total manufacturing costs. What caused this to happen? What would explain the drastic change in cost structure?
2. Why is manufacturing overhead considered an indirect cost of a unit of product? Are there any situations where this could be considered a direct cost of a unit of product and if so, how? Explain.
