definiens: means ( a ) the direct material and labor costs associated with manufacturing the Products, ( b ) overhead allocable to manufacture of the Products and ( c ) the amount paid to Third Parties to acquire manufactured Products, whether or not completed, and ( d ) Distribution Costs . Direct material costs include the costs of purchasing raw materials and packaging components . Direct labor includes the costs of employees directly employed in Product manufacturing, quality control or packaging . Overhead allocated to manufacture of the Products shall be limited to ( i ) a reasonable allocation ofthe cost of employees who have a direct relationship with Product manufacturing, quality control or packaging, but who are not classified as direct labor, which allocation shall be based on each such . employee 's time spent in Product manufacturing, quality control or packaging as compared to time spent on all such employee 's work, and ( ii ) a reasonable allocation of facilities ' costs allocable to Product manufacturing, quality control and packaging . Manufacturing Costs shall be detennined on a reasonable and typical basis consistent with the manufacturing party 's internal cost accounting system or on actual charges from Third Parties