Trends in Product Cost Relationships
Response to the following problem:
The ratios among the three types of product costs have changed quite a bit over the last 150 years of business. Generally, costs of direct materials have consistently formed approximately 50% of total product costs for manufacturing firms. However, the ratio of direct labor costs has been decreasing with an offsetting increase in the ratio of manufacturing overhead costs.
What kinds of costing challenges does this shift from direct costs to manufacturing overhead costs pose for a manufacturing company?
What factors do you think have contributed to this trend?
Do you think that the advent of e-business will significantly affect the amount or ratio of direct labor costs in manufacturing products? If so, how?
Write a 1 to 2 page paper on this topic.