Different types of Cost
Every production has a process and
in this process a firm spent lot of different types of wages, we called it money
cost like wages, raw-materials, equipment's, capitals good, rent, interest &
different types of tax. All these types of cost are called accounting costs.
Money costs are also called explicit costs.
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| Different types of Cost |
Production cost – in production process,
we include lot of cost and mostly we divide all cost in two parts, like –
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Variable cost – these are the cost which is
related fully with our production process. If we increase our production,
variables cost automatically increased with it, for example – wages,
raw-materials, fuel or other production related costs. These costs have a
direct co-relation with production. These cost decrease if our production
decrease
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Total fix cost – those cost which is not related
with production process. We also called them supplementary cost which does not
changed according to the production level like rent, interest, depreciation or
fix staff. A company must pay for these costs if they close their production.
We also called them overhead costs.
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| Different types of Cost |
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Real cost – in a production process, a society
also sacrifices and do lot of efforts, we call it a real cost like saving by
society/investor or sacrifices from leave by an employees.
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Opportunity cost – a cost which is related with
resources used in different production opportunity, because our resources are
rare & also have multiple used for different out- comes or things. In other
words, it is a second best option for the use of rare resources. It include
both explicit and implicit costs
