raw material cost variable cost because it change with volume of product i.e. the more you produce the more you have to purchase for raw material. Fixed cost are never change with changing in volume.
Raw Material Cost is variable cost
examples of fixed cost factory are salary, rent, electricity bills while variable cost are purchase of raw materials,
Fixed costs i.e. Rents, professional fees like insurances, licences, accountants legal support annual maintanance charges. variables will include the cost of the raw produsts to sell, cleaning materials, wages, utilities
AnswerVariable costs change in relation to (and generally in proportion to) sales. Examples include:Chlorine costs for a pool-service company. (More pools serviced = more revenues = more chlorine bought).The cost of nails for a building contractor. (More houses sold = more nails bought).The cost of temporary labor for a temporary staffing company. (More temps placed = more temps hired and paid.)The cost of paper for a printing company. (More jobs printed = more paper used)The cost of beef for a restaurant. (You get the idea).**Costs will increase per production**if there are no production, then there are no coststherefore any 'materials' is an example
The three most common cost behavior classifications are fixed costs, variable costs, and mixed costs. Fixed costs are those expenses that remain constant regardless of the level of production or sales. Examples of fixed costs include rent, salaries, and insurance. No matter how much you produce or sell, these costs will stay the same. On the other hand, variable costs are directly proportional to the level of production or sales. As your production or sales increase, these costs also rise. Examples of variable costs are raw materials, labor, and direct utilities. If your production doubles, variable costs will also double. Lastly, we have mixed costs, which are a combination of both fixed and variable elements. They consist of a fixed portion that remains constant and a variable portion that changes based on production or sales volume. An example of a mixed cost is a phone bill that has a fixed monthly charge plus additional charges based on the number of calls made. Understanding these cost behavior classifications is crucial for businesses to make informed decisions and accurately analyze their financial performance.
Cost to purchase basic raw material for the manufacturing of product is called the raw material cost like in cost of wood in furniture etc.
examples of fixed cost factory are salary, rent, electricity bills while variable cost are purchase of raw materials,
raw material cost variable cost because it change with volume of product i.e. the more you produce the more you have to purchase for raw material. Fixed cost are never change with changing in volume.Raw Material Cost is variable cost
Raw materials is the only variable cost in the above options.
Sales and comssion on other categories
In economics fixed costs are just that, not dependent on production, for example rent is fixed, at least for a tear. Variable costs , such as energy, raw materials, vary according to the level of production. A business can carry on, at least for a while, not paying fully for it's variable costs. It will cease production if fixed costs cannot be paid.
When the firm is not producing any goods. Fixed costs like rent and utilities would remain present and constant, but variable costs such as raw materials and other factors of production would cease.
Variable costs are costs that change depending on how many items you produce or sell. For instance the raw matterial. Whereas fixed cost are similar to overheads, they do not change based on production.
Cost classifications Knoblauch, Inc., manufactures rugby jerseys for collegiate sports teams and sells its merchandise through university bookstores. Required: Raw material Direct labor Variable manufacturin overhead Fixed manufacturing overhead Fixed administrative expense Fixed indirect selling expense Variable direct selling
Fixed costs are costs that do not vary with the level of output, such as rent and insurance premiums. Variable costs are costs that change with the level of output, such as wages and raw materials.
Fixed costs i.e. Rents, professional fees like insurances, licences, accountants legal support annual maintanance charges. variables will include the cost of the raw produsts to sell, cleaning materials, wages, utilities
Building rent of 9000 is assumed to be fixed cost as no matter any work done or not this rent is required to be paid.So raw material cost is total variable cost which is = 3900total units produced = 6000variable cost per unit = 3900 / 6000variable cost per unit = 0.65
Cost can be either fixed cost or variable cost. Fixed costs are the costs that are fixed in nature and do not vary with the change in scale of production. Example of fixed costs are: factory rent. Variable costs vary with the change in scale of production. Example: Raw material cost Net Margin= Sales- Fixed cost- Variable cost Decrease in fixed costs lead to increase in margin of an organization; keeping all other things constant. Sometimes, benefit of decrease in fixed cost may be transferred to the consumer in the form of lower price. Lower price results in higher sales volume with lower sales margin per unit.