Costing Introduction

The two basic types of costs incurred by businesses are

• Overhead costs

• Variable costs

• Operating Costs

• Management Costs

Any employees who work on salary count as

• variable cost

• fixed cost

The key elements included in the production costs are

• Purchase of raw material

• audit fees

• advertising costs

• wages on labor

• administration expenses

How do you find the total cost?

• Total Revenue - Total Expenses = Total cost

• fixed costs + variable costs = total cost

• Overhead costs-direct costs=Total costs

How can costing help your business?

• You can set the price

• New business plans can be made for the future

• Reduce unnecessary costs

• Increase sales