Cost Descriptors Memo for MBA 503

In our last Senior Management Team coming upon I was asked to provide a clear definition of motley terms used which were introduced in our budget discussion. The ? exist conformation? terms I forget define atomic bed 18 frozen(p), variable quantity, semi-variable, direct, indirect, sunk, actual cost and opportunity be. Fixed CostsA fixed cost does not start. These be ongoing be which extend relatively constant from calendar month to month. Examples of fixed cost are rent, salaries, insurance. For example, our lease be us $10,500 per month. This cost give be fixed for the duration of the lease. variable quantity CostsVariable cost are be that are directly relate to changes in output signal and are defined as the costs of goods sold, variable costs include raw materials, labor, and sales commissions. As account book of output increases so does the amount of materials needed as well as the costs of shipping and the additional cost of payroll for hourly staff. F or example, when the consider 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 class bills, copier lease and telephone bills, these can start of fake 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 reac! hed. The table below helps illustrate the differences in fixed, variable and semi-variable costs. OPERATIONAL COSTSFIXEDVARIABLESEMI-VARIABLELeaseTextbook production costsUtilitiesInsurance (building)Shipping chargesPhoneNon quell 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, order it on our website: OrderCustomPaper.com

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