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Business Studies & Its Various Costs

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Business Studies & Its Various Costs

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  1. Business Studies & Its Various Costs

  2. Costs are associated with production and projects. These are to be accurately highlighted in the financial statements of an organization. These statements help in decision making process of the organization for its future planning

  3. Direct Cost Direct costs constitute the material, labor, expenditure on machinery and distribution costs which are used in the manufacturing of a product of a service

  4. Indirect Cost • These costs are not directly linked to the production process. For example, a company has rented an office. Its electricity bill is common with other offices in the building. So, it is difficult to link it directly to the costs of the company.

  5. Fixed Cost • These are the costs which the company has to pay and it is not affected by the production of goods or services.

  6. Variable Cost These are the costs which vary or fluctuate with the level of production. If the production output increases, the variable costs increase. And if the production output decreases, variable costs decreases.

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