Cost Descriptors Memo for MBA 503

In our last Senior Management Team see I was asked to provide a clear definition of several(a) terms used which were introduced in our budget discussion. The ? exist physical body? terms I forget define atomic regimen 18 laid, metamorphoseing, semi-variable, direct, indirect, sunk, actual cost and opportunity be. Fixed CostsA fixed cost does not vary. These be ongoing be which appease relatively constant from calendar month to month. Examples of fixed cost are rent, salaries, insurance. For example, our lease cost us $10,500 per month. This cost pass on be fixed for the duration of the lease. variable quantity CostsVariable cost are cost that are directly relate to changes in toil and are defined as the costs of goods sold, variable costs include raw materials, labor, and sales commissions. As tidy sum of output increases so does the amount of materials needed as good as the costs of shipping and the additional cost of paysheet for hourly staff. For example, when the look of students increases from 6,000 a year to 7,000 a year, the costs of the production and shipment of the textbooks will increase. If the number of students decreases, the costs of production and shipment will also decrease. The costs will vary depending on the number of students. Semi-VariableSemi-variable costs, or mixed costs, are costs that are partially fixed and partially variable.

For example, service syllabus bills, copier lease and telephone bills, these can start of simulated with a flat fee and incur a per-minute or another variable charge (going over the maximum number of copies for the copier) once a certain level is reached. The! table down the stairs helps illustrate the differences in fixed, variable and semi-variable costs. OPERATIONAL COSTSFIXEDVARIABLESEMI-VARIABLELeaseTextbook production costsUtilitiesInsurance (building)Shipping chargesPhoneNon lenify SalariesHourly employee?s payrollCopier leaseSupplies (paper)Direct CostsDirect costs are those that are directly attributable to the manufacturing of a product. For... If you want to get a full essay, orderliness it on our website: OrderCustomPaper.com

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