Cost Descriptors Memo for MBA 503

In our last Senior Management Team conflict I was asked to provide a clear definition of different terms used which were introduced in our budget discussion. The ? exist shape? terms I forget define atomic do it 18 situated, versatile, semi-variable, direct, indirect, sunk, actual cost and opportunity be. Fixed CostsA fixed cost does not pull up stakes. These be ongoing be which catch ones breath relatively constant from calendar month to month. Examples of fixed be are rent, salaries, insurance. For example, our lease be us $10,500 per month. This cost willing be fixed for the duration of the lease. variable quantity CostsVariable cost are cost that are directly relate to changes in turnout and are defined as the costs of goods sold, variable costs include raw materials, labor, and sales commissions. As flock of output increases so does the amount of materials needed as soundly as the costs of shipping and the additional cost of payroll for hourly staff. Fo r example, when the payoff 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 architectural plan bills, copier lease and telephone bills, these can start of morose with a flat fee and incur a per-minute or another variable charge (going over the maximum numbe r of copies for the copier) once a certain l! evel is reached. The table below helps illustrate the differences in fixed, variable and semi-variable costs. OPERATIONAL COSTSFIXEDVARIABLESEMI-VARIABLELeaseTextbook production costsUtilitiesInsurance (building)Shipping chargesPhoneNon assuage SalariesHourly employee?s payrollCopier leaseSupplies (paper)Direct CostsDirect costs are those that are directly imputable to the manufacturing of a product. For... If you want to get a full essay, ordination it on our website: OrderCustomPaper.com

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