Variable cost- Variable costs are the costs which vary in proportion to the units manufacture. Fixed Cost- Fixed costs same remain over a period and do not have any relation to units produced. Selling Cost- Selling costs are the costs incurred in selling the product e.g. Advertisement expenses, sales commission etc. Administrative Cost- Administrative costs are costs incurred in controlling the business organization which are not directly related to financing, selling or manufacturing activities e.g. Office rent, office staff salaries etc. Direct Manufacturing Cost- Direct manufacturing costs include the costs incurred which are directly required for production e.g. direct materials like clothes in shirts manufacturing, direct labor etc. Indirect Manufacturing Cost- Indirect manufacturing costs are the cost overheads incurred in factory which are not directly related to production for example factory rent, depreciation of factory equipment, factory supervisor’s salaries etc. The classification of given costs.

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Chapter 2, Problem 2.21P

To determine

Concept Introduction:

Variable cost- Variable costs are the costs which vary in proportion to the units manufacture.

Fixed Cost-Fixed costs same remain over a period and do not have any relation to units produced.

Selling Cost-Selling costs are the costs incurred in selling the product e.g. Advertisement expenses, sales commission etc.

Administrative Cost- Administrative costs are costs incurred in controlling the business organization which are not directly related to financing, selling or manufacturing activities e.g. Office rent, office staff salaries etc.

Direct Manufacturing Cost- Direct manufacturing costs include the costs incurred which are directly required for production e.g. direct materials like clothes in shirts manufacturing, direct labor etc.

Indirect Manufacturing Cost- Indirect manufacturing costs are the cost overheads incurred in factory which are not directly related to production for example factory rent, depreciation of factory equipment, factory supervisor’s salaries etc.

The classification of given costs.

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