Take a look at the picture above and respond to the following three items. Then use...

Manufacturer - A person who manufactures the product. The process of trade starts from manufacturer.

Retailer - He is an intermediary between manufactures and customers.

Customer - The process of trade ends with customer. All the cost of product will be finally bared by customer.

Three main ingredients that go into the product cost of manufacturer

1. Material
2. Machinery
3. Labour

List of cost to produce a dress for a clothing manufacturer

Variable cost -

• Material
• Packing cost

Fixed cost

• Power
• Rent
• Machinery
• Salaries

Manufacturer and retailer need to know the cost because when they sell the product they need to decide the sales price above the cost to gain the profit.

Accounting for the product cost of a manufacturer is more complicated than tracking product cost for a retailer because there may be few cost for manufacturer like buttons thread etc.which cannot be allocated directly and it will become difficult to identify the actual cost.