Question

- WHAT is fixed cost (4 sentences) and WHY is it important? (4 sentences)

- WHAT is variable cost (4 sentences) and WHY is it important? (4 sentences)

- WHAT is direct labor cost (4 sentences) and WHY is it important? (4 sentences)

- WHAT is direct material cost (4 sentences) and WHY is it important? (4 sentences)

Answer 1

Answer) Direct labour cost : 1) it is a type of variable cost. 2) wages paid to the labour it is known as Direct labour cost. 3) it is dircetly proprtional to the out put of the organisation. 4) Directlabour cost can be caluculated each unit separatly. Fixed Cost : 1) the Cost Does not depend upon the final result (production, sales..etc) 2) The cost incurred even if the sales were at zero. 3) it is the minium cost the company have to bear the expenses. 4) examples: Rent, salary to employees,license fees..etc... 5) This cost cannot be divided or separate to each unit Importnant: it is also importanat for the purpose of decision making or we know the company is in profit or not. We less the Fixed cost from contribution margin then we know the Net Profit or Net Loss Importanat: It is also importanat because it is form part of variable cost of the organisation. It leads to decision making. Direct Material cost : 1) it is a type of variable cost. 2) purchase cost of material it is known as Direct Material cost. 3) it is dircetly proprtional to the output of the organisation. 4) Direct material cost can be caluculated each unit separatly. Variable Cost: 1) the Cost depend upon the final result (production , sales..etc) 2) Varibale cost and company output having Proprtionate relation. 3) This cost can be divided or separate to each unit 4) examples: Direct material, Direct Labour.......etc Importanat: It is also inportanat because it is form part of variable cost of the organisation. It leads to decision making. Importanat: It is also important the variable cost only decids how much Contribution margin having the organisation those output. Contribution margin having positve results that gives favorable to the comnay or vice versa.