Created by Liz Barraclough
almost 10 years ago
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Question | Answer |
Variable Costs change with level of production | |
Fixed costs are constant and do not change with production | |
Stepped fixed costs change with level of production but in a stepped manner | |
Semi-variable costs have an fixed element and variable element, for example, you may pay for telephone rental but then costs vary with use | |
Direct Costs | Traceable directly to a cost unit made up of: Direct material Direct Labour Direct Overheads The total of these is called the prime cost per unit |
Indirect costs | Indirect Costs are those that cannot be identified with any one finished unit. Indirect material – cleaning products Indirect Labour – the production line supervisor Indirect Overheads – rent, rates, electricity |
Production Costs | Cost of Sales are also known as production costs. This category could include production labour, materials, supervisor salaries and factory rent |
Non-production costs | Non-production costs includes distribution such as sales team commission and delivery costs. Administrative costs are also classified as non-production costs such as head office costs, IT support, HR support and accountants. |
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