Supply Chain - Six Catagories of Cost Essay Example | Topics and Well Written Essays - 500 words

Supply drawing string - Six Catagories of Cost - Essay ExampleThis means that the greet of manufacturing a product is not eer stable. The manufacturers should understand variable manufacturing concepts, and how a change in cost may lead to additional expenses or even reduce the production cost. The variable manufacturing costs that affect the entire process of manufacturing includes all the step from the material cost, cost of the required electricity for production to the labor cost (Albrecht, et at 2010).The term obstinate manufacturing costs describes the fees required in creating an item. Manufacturers must pay the fixed manufacturing cost in order to offer the goods. According to some business principles, fixed manufacturing costs are not always fixed permanently. They oftentimes change over time, but follow fixed when related to the production quantity for the period which is relevant. For example, a company which has warehouse costs fixed over the period of lease, can have unpredictable and unlooked-for expenses, which are unrelated to the production.This is an expense that contains both the fixed cost and the variable dowrys. The fixed cost component shall represent the part of the cost which must be paid irrespective of the activity level achieved by the entity. The variable component of cost, on the other hand, is payable proportionate to the activity level (Drury, 2007). For example, in commission structure of a phone, there exists a monthly savorless-rate charge, plus an overcharge of any bandwidth used which exceeds the flat rate. Therefore, the flat rate is the fixed component of the cost, whereas the excess bandwidth becomes the variable component of the cost. Another example is employees who get compensated by commissions (Aryasri, 2008). There is usually a salaried element which happens to be the fixed cost and the commission which is the variable cost.In accounting, total