财务论文范文 固定成本和可变成本的定义的Essay AssignmentAUS 往年给英国伦敦的王**同学的ESSAY 注现已毕业
Fixed cost (FC): is a cost that remains constant, in total, regardless of changes in the level of activity. Fixed costs are not affected by changes in activity. Consequently, as the activity level rises and falls, total fixed costs remain constant unless influenced by some outside force. But fixed cost per unit decreases as the activity level rises and increases as the activity level falls. (Garrison etal., 2006, P49). Fixed costs include salaries of executives, interest expense, rent, depreciation, and insurance expenses. .
Variable cost (VC): is a cost that varies, in total, in direct proportion o changes in the level activity. The activity can be expressed in many ways, such as units produced, units sold, miles driven, beds occupied, lines of print, hours worked and so forth. But variable cost per unit remains constant. ((Garrison etal., 2006, P48).
Direct cost, indirect cost and overhead costs
Direct costs: is a cost that can be easily and conveniently traced to the particular cost object under consideration. The concept of direct cost extends beyond just direct materials and direct labor. (Garrison etal., 2006, P50). Example: the salary of supervisor in marketing department is the direct cost for marketing department. The salary is likely the same each month not depend on the quantity of sales product.
Indirect costs: is a cost that cannot be easily and conveniently traced to the particular cost object under consideration. (Garrison etal., 2006, P50). Â Each business has its own method of allocating indirect costs to different products, sources of sales revenue andÂ business units.Â Business managers and accounts should always keep an eye on the allocation methods used for indirect costs. Example: Depreciation on the production machine is also an indirect product cost, it stays the same each year not depend on the volume produced on the machine.
Costs can be direct and indirect depending on the cost object: product, department,Â and others such as division, customer, or geographic market. The total amount of theÂ cost remain the same as volume changes, it is fixed cost. It is a variable cost if the total cost change in proportion to the change in the activity or volume.
Overhead costs: the indirect recurring costs of running a business that are not linked directly to the goods or service produced and sold. Overhead costs can include payments for the rent of premises, utility bills, and employees’ salaries.