Financial Knowledge and Skills for Business: Week 9

Uses of Full Cost by Managers

• Assessing relative efficiency
• Exercising control
• Assessing performance 
• Pricing + output decisions

Direct and Indirect Cost: Categories

• Direct cost: Cost can identified specifc cost units - effect cost be measured respect each particular output.
• Indirect cost/Overhead: All other elements cost/those cannot directly measured respect each particular unit output.

The Relationship between Direct Cost and Indirect Cost

Direct cost job + Fair share indirect cost/Overheads makes see full cost job.

The Relationship between Fixed Cost, Variable Cost and Total Cost

Fixed Cost + Variable Cost makes see Total/Full costs

The Relationship between Direct, Indirect, Variable and Fixed Costs of a particular job

Fixed Cost, Variable Cost, Direct Costs + Indirect Costs/Overheads makes see Total/Full cost particular job