Cost Descriptors Memo for MBA 503

In our last Senior Management Team contact I was asked to provide a clear definition of sundry(a) terms used which were introduced in our budget discussion. The ? exist phase? terms I forget define atomic make do 18 obstinate, shifting, semi-variable, direct, indirect, sunk, actual cost and opportunity be. Fixed CostsA fixed cost does not modify. These be ongoing be which last out relatively constant from calendar month to month. Examples of fixed be are rent, salaries, insurance. For example, our lease be us $10,500 per month. This cost leave be fixed for the duration of the lease. variable quantity CostsVariable cost are cost that are directly relate to changes in ware and are defined as the costs of goods sold, variable costs include raw materials, labor, and sales commissions. As deal of output increases so does the amount of materials needed as intumesce as the costs of shipping and the additional cost of payroll department for hourly staff. For exampl e, when the act of students increases from 6,000 a year to 7,000 a year, the costs of the production and shipment of the textbooks will increase. If the number of students decreases, the costs of production and shipment will also decrease. The costs will vary depending on the number of students. Semi-VariableSemi-variable costs, or mixed costs, are costs that are partially fixed and partially variable.

For example, service programme bills, copier lease and telephone bills, these can start of glowering with a flat fee and incur a per-minute or another variable charge (going over the maximum number of copies for the copier) once a certain level is reached. The table to a lower place he lps illustrate the differences in fixed, var! iable and semi-variable costs. OPERATIONAL COSTSFIXEDVARIABLESEMI-VARIABLELeaseTextbook production costsUtilitiesInsurance (building)Shipping chargesPhoneNon let off SalariesHourly employee?s payrollCopier leaseSupplies (paper)Direct CostsDirect costs are those that are directly imputable to the manufacturing of a product. For... If you want to get a full essay, revisal it on our website: OrderEssay.net

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