Variable Costs

Variable Costs: Definition Variable costs are total costs that vary in direct proportion to changes in productive output or activity. Examples of common variable costs include direct materials, direct labor, and sales commissions. Variable Costs: Explanation Variable costs change with rises or falls in production. For example, if production increases, a variable cost may also increase, and vice ve…

Read more

Fixed Costs

Fixed Costs: Definition Fixed costs are costs that remain constant in total within a relevant range of volume or activity. Here, the concept of the relevant range is critical; it refers to the range of activity that the company expects to operate in. Alternatively, a fixed cost is a cost that does not vary and, in this way, remains constant over a given period. It also stays in a specific range of…

Read more

Process Costing

Process Costing: Definition A process costing system accumulates the costs of a production process and assigns them to the products that the business outputs. A production report has to be made under the process costing system. Process costing is applied to determine the cost of production in industries where products pass through different phases of production before completion. Under process cos…

Read more