The direct inputs to the manufacturing process (materials and labour) represented the greatest percentage of the total costs. Overhead costs were initially a very low percentage, representing the costs of supervision, factory premises, and basic machinery. Non-manufacturing costs were also very low, including distribution, administration and financing costs. However, the cost structure of a typical manufacturing company has gradually changed. With increasing mechanisation the costs of capital equipment in the factory increased dramatically and with increasing automation direct labour costs have been reduced while indirect labour to support design, production planning, maintenance, material handling etc. increased. This shifted a large proportion of costs into the manufacturing overhead category.

Direct material costs have gradually increased in importance, particularly in companies that buy-in high value component parts from specialist suppliers, rather than processing basic raw materials. The nature of industrial organisation and international marketing activities have also dramatically increased the non-manufacturing component of costs. Large corporate management structures managing product development and strategy, administering financing and investment, and co-ordinating global marketing and distribution are typical of a modern manufacturing company.