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Susan is staying with some friends who have a dog. Each night, when she has turned off the TV and is heading for bed, she gives the dog a treat. Soon the dog gets very excited whenever Susan turns off the TV at night because he has learned what this signal means. When Susan eventually leaves her friends' house, the dog continues to get excited when the owners turn off the TV, but since the owners don't give the dog a treat at this time, the dog's behaviour soon returns to normal. The change in the dog's behaviour after Susan's departure best illustrates the concept of
Direct Materials
Raw materials that can be directly attributed to the manufacturing of a product.
Direct Labor-Hours
Overall hours employees spend directly involved in the fabricating process.
Variable Overhead
Overhead costs that fluctuate with the level of production activity, such as utilities or indirect materials.
Direct Materials
Raw materials that are directly attributable and allocable to a finished product in the manufacturing process.
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