Cost Descriptions Paper Essay Example | Topics and Well Written Essays - 1750 words

exist Descriptions Paper - Essay ExampleHowever, the variable hail per unit is fixed for a specific level of production or comprise. It will vary in original amount proportionately with some measures of business activity, like approach associated with power, maintenance, etc.Whereas Direct Cost argon those cost which can be traced to a specific cost objective or costs which is intimately traceable by per unit and allocated through cost centers. Like direct material, direct labor etc.Manufacturing Cost is the name of aggregate resources of direct material, direct labor and FOH which is allocated in manufacturing the product. Manufacturing costs are excessively referred to as production costs. Manufacturing cost also describes how much cost is incurred on each unit produced. By estimating the manufacturing cost, the management is able to value the units produced in a year, cost of goods sell and inventory, which ultimately, is reported in the income story and balance sheet o f the company. Manufacturing costs include all cost from acquisition of material to conversion into immaculate goods. Packing material, fuel expense, lubricants, depreciation on factory equipments, wages, repair and maintenance, all contribute to the manufacturing cost.Product cost are those costs which are identifiable with the product either directly or indirectly. Product cost mainly consists of direct materials, direct labor, and factory overhead. ... Moreover, if the product is sold it is recorded as Cost of Goods change in the books of accounts and then COGS is matched against the revenue (matching principle) generated by selling the product. In short, product costs are those costs which are treated as inventory that is ready for sale. They are treated as assets until the products are sold (Garrison, 2004).All those cost which are not attributed to product cost are treated as breaker point Cost. Period cost is treated as expensed and directly reported to income statement in the stoppage when they are incurred. Period cost are not debated over purchase or cost of goods manufactured. Period cost include all selling expenses, general and administration expenses, interest expense and income tax expense (Garrison, 2004). In short, Period costs are reported on the income statement separated from the cost of goods sold section. The period cost is deducted from gross profit. Period cost is not essentially the part of the manufacturing process so and then period cost is not treated as a cost of inventory (Meigs et al, 1999). An Opportunity Cost means to get or select the benefit of one alternative by rejecting the other opportunity. It is the cost associated with the best forgone alternative. The opportunity costs is not present in the books of accounts but it is relevant and appropriate with keep an eye on to managerial closing making. Like if a students decides to attend summer school rather than accepting a job of making $500 a week, than the true cost of attending school is more than conscionable books, meals, housing etc and the opportunity cost is $500.Sunk Costs are not relevant in decision making because these costs have been incurred and cannot be changed. Like in the oil exploration