Commonly people refer to 3 categories in product costs, such as materials, labour and overheads.
Traditionally this was a simple way to categorise and segment product costs in a manufacturing business.
Materials would include both raw materials and purchased parts.
Raw materials cover bulk materials such as long pipe, steel coil, plastic pellets, billets of metal for casting. These materials are then processed to make into components, that may then be included in an assembly. If you consider the time and cost of the staff for buying these materials and storing them, it may vary according to the commodity. However, the cost per part is normally small, as the bulk material makes many pieces.
Purchased parts can vary significantly in terms of the staff cost to buy and store them. Buying standard nuts and bolts needs far less purchasing intervention than buying specific engineered parts that need to be measured checked and approved.
Very different approaches and subsequent support costs are required between bulk materials and purchased parts.
Labour usually refers to the processing of the commodity. The manufacturing processing of the units involves labour manpower for the operations, support staff, machinery, Factory buildings, structure, services and utilities.
If this is all put under one heading of "Labour", we can't really understand what is driving the costs.
Overheads is quite confusing as a broad term. An overhead is simply anything that is loaded on top and related to something else. Quite often companies apply one or more overhead as a percentage on top of Material and Labour to calculate the cost.
Using the extended description of Labour to cover manufacturing processing, everything associated with production has now been covered. So in this sense, we can look at overheads as non-production supporting costs often referred to as indirect cost. Many industries refer to this as SGA (Sales and general admin). Costs include office-related activities such as the cost of the office buildings, Rent, Operating costs, Sales, Web Infrastructure, Procurement planning, Administration, Taxes, HR, IT, Accounting, Project planning, Legal and Marketing.