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Types of expenses

Types of expenses

Are fees that cann be attributed directly to a product or line of product or a source of income from the sale, or a unit or the operation of the company. An example of a direct cost would be the cost of tires on a new car.

Indirect costs are very different and cannot be linked to a specific product, the unit or activity. The cost of hand of work or benefits for a car manufacturer are definitely cost, but may not be connected, each with a vehicle. Each company has a method of allocation of indirect costs of different products, sources of income for sales, business units, etc. Most of the mapping methods are less efficient and generally eventually be random to one degree or another. Accounts and business managers should always keep an eye on the allocation methods used for indirect costs and cost figures produced by these methods with a grain of salt.

Fixed expenses are relatively cool even on the beach large volume of sales or production of output. They are like an albatross around the neck of the company and a company should sell his product at a high enough profit at least profitability.

Variable costs can increase and decrease in proportion to changes in the level of production or sales. Variable costs vary in proportion with changes in production.

Relevant costs are essentially future costs that can be created, according to which strategic direction a company. If a car manufacturer decides to increase production, but the cost of the tyres back, this cost must be taken into account.

Irrelevant costs which should be left aside when deciding on the future of the action. They charge that can cause a bad decision. While expenses are future costs, these costs are non-relevant costs that have been created in the past. The money is gone.

Types of expenses - Internet Business Online News


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