Costing And Decision Making..final

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Accounting

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Rasmussen University

Course

ACG 3357

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Homework

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oelnar7200

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Costing and Decision Making

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University Affiliation

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Instructor’s Name

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Costing and Decision Making

Description of the Different Expenses

The costing system involves direct or indirect cost and variable or fixed cost of expenses.

Direct costs are the traceable expenses that are wholly tied to the products and services produced

or sold. Direct costs are traceable reasonably straightforward to a single cost object that include

department, product, or service. Direct costs are primarily variable and rarely need to be fixed cost

in nature (Team, 2021). They include direct materials, direct labor, power and fuel consumption,

wages of staff, and manufacturing supplies. In contrast, indirect costs are the expenses that are not

traceable or directly accountable to the cost of the objects produced or sold. Some indirect costs

such as payment of employee wages and salaries keep on recurring and repeat after regular periods

in a company. The indirect costs include utilities, rent, employee salaries, office supplies,

professional expenses, and other overhead expenses.

Variable costs are the corporate expenses that change as the products and services produced

or sold change in a company. Varying of the costs is directly proportional to the volume of

materials, labor, and other essentials for production. They can only be controlled by the responsible

heads of departments (Girsch-Bock, 2020). They include utility costs, direct materials, direct

labor, and sales commissions. On the other hand, fixed costs are the expenses incurred by a

business or an organization that does not change regardless of a decrease or increase in the

quantities of products sold and change in activities. Fixed costs are set for various departments by

arbitrary managers and can only be changed and controlled by the operational supervisors and

executive management. They include amortization, interest expenses, salaries, depreciation, rental

lease payments, property taxes, and some utilities. The table below shows the various

classifications of the costs of expenses incurred by the community hospital.

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1 Costing and Decision Making Student’s Name University Affiliation Course Code Instructor’s Name Date Submitted 2 Costing and Decision Making Description of the Different Expenses The costing system involves direct or indirect cost and variable or fixed cost of expenses. Direct costs are the traceable expenses that are wholly tied to the products and services produced or sold. Direct costs are traceable reasonably straightforward to a single cost object that include department, product, or service. Direct costs are primarily variable and rarely need to be fixed cost in nature (Team, 2021). They include direct materials, direct labor, power and fuel consumption, wages of staff, and manufacturing supplies. In contrast, indirect costs are the expenses that are not traceable or directly accountable to the cost of the objects produced or sold. Some indirect costs such as payment of employee wages and salaries keep on recurring and repeat after regular periods in a company. The indirect costs include utilities, rent, employee salaries, office supplies, professional expenses, and other overhead expenses. Variable costs are the corporate expenses that change as the products and services produced or sold change in a company. Varying of the costs is directly proportional to the volume of materials, labor, and other essentials for production. They can only be controlled by the responsible heads of departments (Girsch-Bock, 2020). They include utility costs, direct materials, di ...
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Tags: decision making accounting costing Business Managers Different Expenses