Elements of cost?
What do you anticipate by "elements of cost"? Please explain me the elements of cost in a work process. (this is for an assignment)
Answers:
ELEMENTS OF COST: A cost is composed of three elements i.e. stuff , work and expense. Each of these elements may be direct or indirect.
DIRECT COST: These are the costs which are incurred for and conveniently indentified near a fastidious cost element, process or equipment. For a spinning mill, costs of rawmaterial used, packing material, freight etc are direct costs
INDIRECT COST: These are nonspecific costs and are incurred for the benefit of a quantity of cost unit, processes or departments. These costs cannot be conveniently identified beside a expert cost component or cost spotlight. In a spining mill, power cost, administrative wages, executive salary, materials used surrounded by repairs etc are indirect costs.
The lingo direct and indirect should be used in relation to the reason of costing. An item of cost may be direct cost in one armour and matching may be indirect in the other covering.It is the character of business and the cost component chosen that will determine whether a faddy cost is direct or indirect.
Pls click on the intertwine for the full explanation of the above as capably as on fixed, changeable costs and overheads.
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Answers:
ELEMENTS OF COST: A cost is composed of three elements i.e. stuff , work and expense. Each of these elements may be direct or indirect.
DIRECT COST: These are the costs which are incurred for and conveniently indentified near a fastidious cost element, process or equipment. For a spinning mill, costs of rawmaterial used, packing material, freight etc are direct costs
INDIRECT COST: These are nonspecific costs and are incurred for the benefit of a quantity of cost unit, processes or departments. These costs cannot be conveniently identified beside a expert cost component or cost spotlight. In a spining mill, power cost, administrative wages, executive salary, materials used surrounded by repairs etc are indirect costs.
The lingo direct and indirect should be used in relation to the reason of costing. An item of cost may be direct cost in one armour and matching may be indirect in the other covering.It is the character of business and the cost component chosen that will determine whether a faddy cost is direct or indirect.
Pls click on the intertwine for the full explanation of the above as capably as on fixed, changeable costs and overheads.