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In order to determine the total cost of a product, you need to consider both upstream and downstream manufacturing costs. This article will briefly discuss what these are and how they apply to your business.

What are upstream manufacturing costs?

Upstream manufacturing costs refer to the process of transforming direct materials into finished goods. These types of costs include labor, raw materials, utilities, waste disposal fees, equipment depreciation, indirect material charges like packaging or freight shipping expenses. The purpose is for up-front production that lowers the final cost per unit sold by reducing labor hours required and lowering input prices from suppliers.

If you’re not sure where your company stands on this spectrum or why it’s important to know which category your company falls under then keep reading. {{blog-post}} \t\t{!*} Define “upstream manufacturing costs.” Upstream manufacturing refers to the process of transforming direct materials into finished goods, and these are some examples: labor, raw materials, utilities, waste disposal fees, equipment depreciation, indirect material charges like packaging or freight shipping expenses.

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The purpose is for up-front production that lowers the final cost per unit sold by reducing labor hours required and lowering input prices from suppliers. If you’re not sure where your company stands on this spectrum or why it’s important to know which category your company falls under then keep reading. What are downstream manufacturing costs? Downstream manufacturing refers to the conversion of a completed product back.

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