MANUFACTURING COSTS
Direct Labor (DL)
Direct Materials (DM)
Overhead (OH)
Indirect Materials
Indirect Labor
Other
NON-MANUFACTURING COSTS
Marketing or Selling Costs
Administrative Costs
Elements
A. MATERIAL
B. LABOUR
C. EXPENSES
MATERIAL
A. Inspectors
B. Supervisors
C. Internal transport staff
D. Storekeeper, maintenance staff
EXPENSES
Variable
Varies with volume and constant per unit
Semi-variable
A cost could be variable for one level of activity whereas it could
be fixed for another.
Sale
Sunk Costs – Costs that have been incurred and that are not
affected by any current/future action
○ What would be considered sunk cost if Macy’s decides to expand
its fragrance department and shrink its accessories department?
Depreciation on the building, cost of the building