Definition: Direct costs are those expenses or costs that can be directly associated or contributed to a product, service, department, or cost object that the company could totally verify or trace. The new costing techniques introduced by cost accounting divide total product costs into two categories or types. One is called direct costs, and the […]
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Definition: Indirect costs are those expenses that are incurred in common for different projects, products, or business activities and cannot be easily divided for individual projects, products, or activities. We also could say all the costs that could not be allocated to direct costs are indirect costs. Indirect costs are also recorded in the company’s
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Definition: A variable cost is a direct cost that the total costs or expenses change when the total volume of goods and services that the company produces. A company’s total variable cost increases and decreases with the amount of production, but the variable cost per unit is not changing. If production goes up, variable costs
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Companies prepare financial statements to report their financial position and performance after every period. This period may differ from one company to another. On top of that, the interval for which they report those activities may also vary. For example, companies can prepare those statements monthly, quarterly or annually. However, they must use the same
Adjusted Vs. Unadjusted Cost of Goods Sold: What are the differences? Read More »
Although the primary purpose of running a business is profit-making, running a business requires owners to incur expenses. Different direct and indirect expenses of a company make it possible to perform day-to-day operations. Bookkeepers and accountants are responsible for recording all the major and minor expenses that a business entity incurs. Expenses are the costs
Cost Of Goods Sold Vs. Operating Expenses: What Is The Main Difference? Read More »
Introduction to expense: An expense is a cost a business incurs to generate revenue. An expense can also be defined as the cost of using an asset to generate revenue. Expenses in the income statement are deducted from the revenue. According to the matching principle, they are to be recorded in the period they are
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Overview: There are always the costs associated with the product that the company sells to its customers. Some costs are directly associated and some costs are not directly associated with the products. Direct labor and direct material are good examples of the costs directly associated with the products. And mission expenses to sellers are the
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Definition: Traceable Fixed Costs can be defined as fixed costs that can be specifically attributed to a particular segment in the business. During the normal course of the business, it can be seen that numerous different costs are associated with a company. Hence, it is important to identify which costs are associated with which specific
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Cost of goods sold refers to the costs involved in making the goods or services that are being sold. It is basically the direct materials, direct labor, and direct expenses involved in making the products. These are easily traceable costs and can be easily identifiable from looking at the products. The other costs that cannot
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How does a real estate company work? Real estate consists of property such as land, buildings, and any natural resource. Real estate also includes commercial properties such as offices, stores, hotels, services, and other businesses. Industrial properties include structures used in manufacturing, such as factories, warehouses, and research centers. The real estate business primarily used
Cost of Goods Sold of the Real Estate Business – Explained Read More »