definiens: means for the Product the fully allocated manufacturing costs, incurred only in connection with the manufacture of the Product, determined in acc ordance with U.S. generally accepted accounting principles ( GAAP ) which includes and is limited to : 1 . direct labor ( salaries, wages and employee benefits ) ; 2 . direct materials ( documented ) ; 3 . actual and direct operating costs of building and equipment used only in connection with the manufacture of the Product ; 4 . allocated depreciation and repairs and maintenance ; 5 . in - process and product testing ; 6 . an allocation of overhead cost s incurred in connection with the manufacturing of Product including : raw material supply and manufacturing administration and management ; supply and material management, storage and handling ; and manufacturing and employee training ; 7 . royalties paid to third parties ; and 8 . no charges for idle capacity or underutilized facilities or personnel shall be included in the manufacturing cost