Categories of Cost Can Be Divided Into Essay

Open, View, and/or
Download this Document

Total Length: 628 words ( 2 double-spaced pages)

Total Sources: 3

Page 1 of 2

Categories of Cost

Cost can be divided into following six categories:

Variable Costs

Fixed Costs

Semi-Variable or Mixed Costs

Total Production Costs

Direct Costs

Indirect Costs (Overhead)

Variable Costs: Variable costs are those costs that change with number of units produced or volume of production (Jackson, Sawyers and Jenkins, 2009). These are also called as the product costs as they vary with each unit of production. Some of the variable costs that changes with the production level include materials, labor and shipping.

Fixed Costs: Fixed cost is the costs that is not affected by the volume of production and remains the same, regardless of the number of units produced. It is also called as period costs which is the name derived by its ability of being occurring over a particular period. Examples include: Rent, business licenses etc.

Semi-Variable or Mixed Manufacturing Costs: Semi- Variable or a mixed cost has components of both fixes as well as variable costs.

Stuck Writing Your "Categories of Cost Can Be Divided Into" Essay?

View All Our Example Categories of Cost Can Be Divided Into Essay

Have A Custom Example Essay Written

The fixed cost part of the cost is paid irrespective of the level of production or activity carried out in the entity (Drury, 2008) while the variable part varies. A simple example is of a telephone bill in which some charges are fixed while remaining varies depending upon the service used.

4. Total Production Costs: Total Production Costs is the total cost used for making or producing a product or service. It includes direct as well as indirect costs that are incurred during the production.

5. Direct Costs: Direct cost is the cost that can directly be related to each unit produced. In most of the cases, direct cost is also the material cost, for instance materials and labor used. Advertising expense can also be a direct costs but it is not variable.

6. Indirect Costs: Indirect costs are the costs that cannot be related to any product. These are the overhead costs for doing.....

Show More ⇣

     Open the full completed essay and source list


OR

     Order a one-of-a-kind custom essay on this topic


sample essay writing service

Cite This Resource:

Latest APA Format (6th edition)

Copy Reference
"Categories Of Cost Can Be Divided Into" (2012, August 05) Retrieved July 8, 2025, from
https://www.aceyourpaper.com/essays/categories-cost-divided-81442

Latest MLA Format (8th edition)

Copy Reference
"Categories Of Cost Can Be Divided Into" 05 August 2012. Web.8 July. 2025. <
https://www.aceyourpaper.com/essays/categories-cost-divided-81442>

Latest Chicago Format (16th edition)

Copy Reference
"Categories Of Cost Can Be Divided Into", 05 August 2012, Accessed.8 July. 2025,
https://www.aceyourpaper.com/essays/categories-cost-divided-81442
   

Open, View, and/or
Download this Document
order custom essay example