Direct Cost, Indirect Cost % and Overhead Rate in Work Center

Direct Cost is used to capture the direct labour cost production, which is the wages paid to production worker that directly involved in manufacturing a product.

Overhead Rate and Indirect Cost % in Work Center Card are used to capture Manufacturing Overhead cost. Manufacturing Overhead Cost are the cost incurred in the manufacturing facilities other than direct material cost and direct labour cost. Example of Manufacturing Overhead Cost are:

• Depreciation of factory building
• Depreciation of manufacturing equipment
• Electricity
• Material handling cost
• Salary for plant manager, maintenance staff, cleaning staff, etc. 
• Plant insurance