Raw Materials

Electronic watches make use of many of the most modern materials available, including
plastics and alloy metals. Cases can be made of either plastic or metal; watches with metal
cases often include a stainless steel backing. Microchips are typically made of silicon, while
LEDs are usually made of gallium arsenide, gallium phosphide, or gallium arsenide
phosphide. LCDs consist of liquid crystals sandwiched between glass pieces. Electrical
contacts between parts are usually made of a small amount of gold (or are goldplated);
gold is an almost ideal electrical conductor and can be used successfully in very small
amounts.

Furnace (depreciation)
Leather (factory)
electricity(factory)
electricity(showroom)
vacuum chamber (depreciation)
Personal Digital Assistant
LED (Factory)
Rent (factory)
Rent (Showroom)
Advertisement costs (Showroom)
Sales personnel salary(Showroom)
Accountant Salary
Security wages(factory)
Security Wages (showroom)
Manager’s Salary
Showroom fixtures
Interior Décor and Aesthetics
Computers in Showroom
LED/LCD Screens(Showroom)
Toll Taxes
Octroi Charges
Freight Charges
Driver’s Salary
Loading- Unloading charges
Stationery Expenses
POS-ATM machine deposit with Bank (Swipe Machine)
Water supply
Maintenance (factory)
Maintenance (Showroom)
Assembly cost (factory)
Supervisor salary (Factory)
R&D (Factory)
 IT personnel salary
Transportation cost (Factory)
Carrying cost (Factory)
 Packaging cost (Factory)
Forklift drivers’ salary (factory)
Refreshment costs (Factory)
Refreshment costs(showroom)
Discounts (Showroom)
Gold Coins (Showroom)
Insurance(factory)
Insurance(showroom)
marketing expense (showroom)
 Labour cost
commission costs (Showroom)
travel expenses (Showroom)
Carriage (inwards and outwards)
Refreshment cost (Showroom)
Packing Charges(Showroom)
Website Charges (Showroom)
On the job Training Charges (Showroom)
Fuel Charges (Factory)

Factory cost refers to the total cost required to manufacture goods. This concept is the basis
for several cost accounting analyses. Factory costs have traditionally been broken down into
the following three categories of cost:

 Direct materials. This is the cost of those materials directly associated with the construction
of goods. It can also include the cost of materials destroyed during the setup and testing of
production equipment, as well as a normal amount of scrap.
 Direct labor. This is the cost of labor directly associated with the production of goods. This
category of cost has been called into question, since most production labor is actually
needed to provide a minimal level of staffing to the production area, and so sho uld really be
considered an overhead cost. Only in cases where labor costs can be specifically associated
with a particular unit of production should costs be considered direct labor. For example, if a
production worker is paid a piece-rate wage for each unit manufactured, this can be
considered a direct labor cost.
 Manufacturing overhead. This category is comprised of all the costs incurred that are needed
to run a factory, but which are not associated with a specific unit of inventory.
Manufacturing overhead can include, but is not limited to, the following costs:
o Equipment depreciation
o Equipment maintenance
o Factory rent
o Factory utilities
o Materials handling staff wages
o Production supplies
o Quality assurance staff wages
o Supervisor salaries

Manufacturing overhead is typically assigned to individual units of production, based on a

rational and consistently-applied allocation methodology. Direct materials and direct labor
costs are also assigned to individual units. Thus, all factory costs are assigned to units of
production. As such, these costs are recorded as part of the inventory asset. Once the units
are sold, the associated factory cost is charged to expense through the cost of goods
sold account.

The "factory cost" term is sometimes applied only to manufacturing overhead costs, without
consideration to the costs of direct materials or direct labor. If so, the "factory cost" term is
essentially the same as factory overhead.