various elements of costs

Question

Write down the various elements of costs?

Answer 1

- Material Cost is the cost of material or the product employed by the organization for its manufacture purpose. Material is the matter, from that a product is made. Therefore, it might be in a raw or a manufactured state. It can be indirect or direct.

- Direct Material Cost forms a vital part of the finished product and is identified with the single cost centre. It is as well explained as procedure material, stores material, production material, and so on.

- Indirect Material Cost is employed for subsidiary purposes of the business and can’t be expediently identified with the single cost centre.

-Labor Cost is the cost, sustained in the form of compensation paid to the employees or labors of the organization. The workforce needed to convert material in finished product is called labor. It can be indirect or direct.

- Direct Labor Cost is the cost sustained on those employees who straightly take part in the manufacturing procedure and simply identified with the single cost centre.

-Indirect Labor Cost is s the cost sustained on those employees who don’t straightly take part in the manufacturing procedure and can’t identify with the single cost centre.

-Expenses are the prices of services offered to the organization. It can be indirect or direct.

- Direct Expenses are the expenditures that can be straightly identified with the single cost centers.

- Indirect Expenses are the expenditures that can’t be directly identified with the single cost centers.