It is divided into the following: o Direct Material Cost: It is the cost of those materials which are used directly for manufacturing the product and become part of the finished product. This expense can be directly assigned and charged to the manufacturing of a specific product or job and includes scrap and scrap that has been cut away from the original bar or casting. o Indirect material cost: In addition to direct materials, a number of other materials are required to facilitate the conversion of direct materials into the final form. Although these materials are consumed in production, they do not become part of the finished product and their cost cannot be directly attributed to the manufacture of a specific product. Such materials are called indirect materials. Indirect materials include oils, general tools, greases, sandpaper, coolants, cotton scraps, etc. The cost associated with indirect materials is called indirect material cost.b) Labor Cost: It is the expense incurred on wages, salaries, overtime, bonuses, etc. of the company's employees. It can be classified