A fixed cost is a cost that does not change over the short-term, even if a business experiences changes in its sales volume or other activity levels.
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What is costing?
Costing is ascertaining the cost of a product or service and providing information to be used by management
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What is managerial accounting?
Accounting where there is the use of information that encourages strategic planning, helps them set realistic goals, and encourages an efficient directing o
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What are expense costs? and give one example
Expenses- regular operational expenses used for running the business and its activities ( example rent, rates and insurance)
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What is an example of a fixed cost?
Example Rent, Insurance or any flat charges that does not change with activity or production levels
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What is a direct cost?
Direct costs are those that are directly attributable or traceable to the manufacture of a product
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What are material costs? and give one example of such cost
Materials costs are the tangible goods used in producing the product example using plastic to make water bottles
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What are labor costs? and give one example
Labor- Wages and salaries paid to employees involved in manufacturing. For example a grass cutter for a landscaping company
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What is an example of a variable cost?
materials used in production, labor wages if they are based on change in production or activity etc.
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What is an indirect cost?
An indirect cost cannot be directly attributable or traceable to a product or service.
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Which of the following is not an example of a direct cost? Metal used to produce cars, Wood used to make tables, cloth used to make sheets or paper used in the accounting department
Paper used in accounting department
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An item is being sold at $100 with a mark up of 20% how much is the mark up of the item?