Monday, June 21, 2010

Different types of cost with details

When we are categorize a product according to its cost we need to know what type of cost it is. Here is the details below....

Direct Costs : This costs is directly attached with the product. Few direct costs will create the full costs of a particular product. Here the example will be tyers cost will be direct cast in an automobile company.

Indirect Costs : This cost you will not able to calculate on aspects of a particular product. Actually it is some uncertain costs which is immeasurable like the extra labour cost, damarage costs etc. So, this type of costs will be calculated in aspect of a companies total production not on a particular product or production.

Fixed Cost :This cost is certain. Because while you are going for a production you need to purchase raw materials & For that reason you have fix one charges which is non changeable. Because the raw materials is important to start a production. Example : Glass is a raw material for a mirror factory. So, Costs of glass is fixed cost for that mirror factory.

Variable Costs :This cost is depends on the situation. It may increase or decrease. So, the selling price of a particular product will some extent depends on the variable cost.

Relevant Cost : This is not directly related to the selling price but partially related. If costs are directly related to the production then that is relevant cost.

Irrelevant costs :This is not related to the production but this is also an unseperatable expenses which is called irrelevant costs.

So, these above mention costs will make the total production cost.

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