a) Food Cost: Direct Material Cost: In hotel industry the food cost is termed as direct material cost and includes all food articles either used in the raw form or in semi cooked or cooked form in order to finish the dish and sell.

b) Labour Cost:

i) Direct Wages: Direct wages or salaries are the wages which can be allocated to cost centre or cost unit.

The direct wages may include the following:

a) Laborers engaged in altering the condition, conformation and composition of the product. 

b) Inspectors, analysis, etc specifically required for the production. 

c) Wages paid to foremen, charge hands, etc is termed as direct wages.

ii) Direct Expenses: The direct expenses other than the direct material cost and direct wages which can be identified with and allocated to cost center of cost unit are termed as direct expenses. 

It includes the following.

a) Cost of special designs, drawings or layout.

b) Hire of special tools or equipments for a specific job. 

c) Maintenance costs of tools and equipments used in production.

c) Over head:

i) Production Overhead: It includes all indirect material cost, indirect wages and indirect expenses incurred for the production of goods in a unit. 

It include the following groups of indirect items:

a) Indirect material 

b) Indirect wages 

c) Indirect expenses

ii) Administrative Overhead: It includes all indirect material cost, indirect wages and indirect expenses incurred in the direction, control and administration of a unit. 

Eg:-printing and stationery, legal charges.

iii) Selling Overhead: It includes all indirect material cost, indirect wages and indirect expenses incurred in the promotion of sales and retention of customers. 

Eg: Catalogues, rent, insurance premium paid for showrooms.

iv) Distribution Overhead: It includes all indirect material cost, indirect wages and indirect expenses incurred with making the packed product available for dispatch. 

Eg: Wages of packers, dispatch clerks etc.