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Costing And Decision Making Ed

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Accounting
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Rasmussen CollegeRasmussen College
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Running head: COSTING AND DECISION MAKING 1
Costing and Decision Making
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COSTING AND DECISION MAKING 2
Costing and Decision Making
Direct cost is simply a cost that is directly connected to the creation of a particular
product or service. Direct costs can be a department, service or a commodity and can be drawn to
the cost object. Both direct and indirect costs are the are primary sorts of expenses occurred by
corporations. Direct costs are subject to fluctuations as they vary with manufacturing levels.
Indirect costs are the costs incurred past the production expenses to cover the price of
sustaining the complete corporation. Indirect costs are referred to as the real cost of operating
business because they are the remaining overhead charges after constituting direct costs.
Variable costs are the corporate costs tied to the exact number of products or services
produced. The production volume determines the rise or fall of variable cost as they are directly
proportional. The variable costs are different within different companies, even those within the
same production fields and thus no logic for comparing. Variable costs are computed by
multiplying the variable cost per unit of output by the quantity of the production.
Fixed costs are the costs experienced by business ventures and companies. Different from
the variable costs, an enterprise’s fixed costs remain constant regardless of the production output
volume. Fixed costs can’t be evaded as they remain the same whether products and services are
produced or not.

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Running head: COSTING AND DECISION MAKING Costing and Decision Making Students Name Institutional Affiliation Date 1 COSTING AND DECISION MAKING 2 Costing and Decision Making Direct cost is simply a cost that is directly connected to the creation of a particular product or service. Direct costs can be a department, service or a commodity and can be drawn to the cost object. Both direct and indirect costs are the are primary sorts of expenses occurred by corporations. Direct costs are subject to fluctuations as they vary with manufacturing levels. Indirect costs are the costs incurred past the production expenses to cover the price of sustaining the complete corporation. Indirect costs are referred to as the real cost of operating business because they are the remaining overhead charges after constituting direct costs. Variable costs are the corporate costs tied to the exact number ...
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