How do I differentiate between fixed cost, variable cost, different rates such as overhead, hourly rates, and are there formulas to figure these out? I need this in the simplest forms, as I have never dealt with this, and the book does not offer much background.

How do I differentiate between fixed cost, variable cost, different rates such as overhead, hourly rates, and are there formulas to figure these out? I need this in the simplest forms, as I have never dealt with this, and the book does not offer much background.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter2: Building Blocks Of Managerial Accounting

Section: Chapter Questions

Problem 12Q: Explain how the high-low method is used for cost estimation. What, if any, are the limitations of...

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Concept explainers

Manufacturing Costs

Manufacturing cost is the total cost of procuring or producing a product. In other words, the manufacturing cost is the cost that an individual or business owner undertakes for the manufacturing of goods.

Question

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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