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Exhibit 3-12
-Refer to Exhibit 3-12. The statement "to get more apples we have to give up wheat" is best illustrated in the diagram by a movement from:
Nonmanufacturing Cost
Expenses not directly tied to the production of goods, such as administrative, sales, and marketing costs.
Prime Costs
The combined direct costs of raw materials and labor that are directly involved in the production of a product.
Indirect Material
Materials used in the manufacturing process that are not directly incorporated into the final product, such as lubricants and cleaning supplies.
Direct Labor
The labor costs directly associated with the manufacturing of products, including wages of workers who are actively involved in the product's creation.
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