Question

Discuss the classification of direct and indirect, fixed and variable costs for a company that manufactures or provides services in the same sector as your selected final project company. Identify two direct cost and two indirect costs that would be material amounts of the total COGM, and indicate whether these would be fixed or variable and why you consider them fixed or variable.

Answer 1

Answer:

A Direct cost is a value that can be totally ascribed to the creation of particular merchandise or administrations.
A few costs, for example, devaluation or authoritative costs, are more hard to relegate to a particular item and in this way are thought to be Indirect Costs.

Identifying The Two direct cost and two indirect costs that would be material amounts of the total COGM & indicating whether these would be fixed or variable and why you consider them fixed or variable -

* Direct Costs might be identified with Labour, materials, fuel or power utilization.

Direct Costs - Material and Labour –

These costs are straightforwardly inferable from items, add up to cost differ as indicated by number of products are being made. Thus these Costs are called variable Costs.

* Indirect Costs might be Depreciation or authoritative costs ie., Factory Rent, and so on.,

Indirect Costs - Depreciation and Factory Rent

These costs are not straightforwardly Attributable to COGM , anyway it is required to make the merchandise. Regardless number of units are being produced these costs are not going to be changed. Consequently These costs are called Fixed Costs.