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Direct Cost

Remain constant in total within the relevant range of activity. In a least-squares regression retained earnings line, the vertical intercept of the line represents the total ____ cost.

costs that can be easily and conveniently traced to a specific product are called

Any item for which cost data is desired is called a ____ ____. A laptop computer manufacturer would consider the computer’s processor chip to be a ______ cost. Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ______. cash flow Any item for which cost data is desired is called a______. Add the factory manager’s salary, wages of maintenance and janitorial workers, and salaries of front office personnel. Add the line manager’s salary, and possibly wages incurred in the cutting room .

Direct Vs Indirect Costs

Examples of direct labor cost include labor cost of machine operators and painters in a manufacturing company. Like direct materials, it comprises of a significant portion of total manufacturing cost. A cost that is easily traceable to a particular cost object is known as direct cost. The use of the term “direct cost” is not limited to direct materials and direct labor. Every cost that can be easily and conveniently traced to a particular product, customer, branch, plant or any other cost object is a direct cost. For example, if Bata shoes company wants to assign costs to all the branches in Pakistan, then the salary of the manager of Islamabad branch would be a direct cost of that branch.

costs that can be easily and conveniently traced to a specific product are called

Manufacturing costs other than direct materials and direct labor are categorized as manufacturing overhead cost . It usually includes indirect materials, indirect labor, salary of supervisor, lighting, heat and insurance cost of factory etc. Usually, manufacturing overhead costs cannot be easily traced to individual units of finished products. The labor cost that can be physically and conveniently traced to a unit of finished product is called direct labor cost or touch labor cost.

What Are The Types Of Costs In Cost Accounting?

Should not be expressed on a per unit basis when making decisions. High-low or least squares regression analysis should only be done if a ____ plot depicts linear cost behavior. Cost assumption are reasonably valid within the ____ ____ of activity. In automobile manufacturing plant, the assembly-line workers are considered to be ____ ____. The material used to make a couch is a _______ cost of the customer placing the order. Course Hero is not sponsored or endorsed by any college or university.

  • When a company’s production output level increases, variable costs increase.
  • Variable costs are costs that vary as production of a product or service increases or decreases.
  • Unlike direct costs, variable costs depend on the company’s production volume.
  • Direct costs can also be fixed costs, such as rent payments that are directly tied to a production facility.

We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. A measure of how sensitive https://business-accounting.net/ net operating income is to a given percentage change in sales dollars is known as operating ___________________.

Direct Costs

Any item for which cost data is desired is called a _________________. Any item for which cost data is desired is called a ____________________ __________________.

The cleaning crew that cleans the plant would also be indirect labor, as would the maintenance crew that handles repairs for the plant. Whatever cost allocation base is chosen, it must be a “common denominator” costs that can be easily and conveniently traced to a specific product are called across all cost objects. For example, a furniture factory could allocate overhead costs across all products using direct labor hours, because direct labor is incurred by all products made at the factory.

“Indirect labor” includes costs for labor that is used in manufacturing but which cannot be directly traced to a specific cost object. costs that can be easily and conveniently traced to a specific product are called Supervisors for a plant (who oversee production for all of the company’s products) would be categorized as indirect labor.

costs that can be easily and conveniently traced to a specific product are called

The allocation base is the “link” that is used to attach overhead costs to the cost object. In a manufacturing setting, the simplest allocation base is the number Certified Public Accountant of units produced. For example, if the factory makes 15,000 units, the accounting system can simply “spread” the overhead costs evenly over all 15,000 units.

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