No
An example of a monthly fixed cost for a sandwich soap is the monthly rent or the wages that they pay monthly.
Direct labor wages are normally Variable costs, charged directly to the Production Cost Account, what is commonly called WIP. It is commonly held that direct labor wages change proportionally to the changes of the production level. In fact, however, hourly wages are only related to a time unit, not to pieces produced. True direct wages are piece-work wages, but very few industries pay their workers by unit of production. We should have the option to treat a direct labor wage as a fixed cost, just as salary is a fixed cost. Monthly or hourly, these payment are paid by time interval, not by production unit
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
If wages are paid of those workers which directly related with the manufacturing or units then wages are part of prime cost otherwise it is part of conversion cost.
No
wages are variable cost reason being is that wages are being used over and over again and does not remain constant.
An example of a monthly fixed cost for a sandwich soap is the monthly rent or the wages that they pay monthly.
No, wages are typically considered a variable cost because they fluctuate based on factors such as the number of hours worked and the rate of pay. Fixed costs, on the other hand, do not change with the level of production or sales.
Direct labor wages are normally Variable costs, charged directly to the Production Cost Account, what is commonly called WIP. It is commonly held that direct labor wages change proportionally to the changes of the production level. In fact, however, hourly wages are only related to a time unit, not to pieces produced. True direct wages are piece-work wages, but very few industries pay their workers by unit of production. We should have the option to treat a direct labor wage as a fixed cost, just as salary is a fixed cost. Monthly or hourly, these payment are paid by time interval, not by production unit
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
If wages are paid of those workers which directly related with the manufacturing or units then wages are part of prime cost otherwise it is part of conversion cost.
Fixed cost become relevent cost when a particular decision affects the fixed cost of production. For Example: Before Decision fixed cost $100 After Decision Fixed Cost $120 so in this case fixed cost also becomes relevent for decision making.
capital is a fixed cost
Fixed cost and variable cost is equal to total cost as per following formula: Total Cost = Fixed Cost + Variable Cost
conversion cost = direct wages + factory overheads (indirect material + indirect wages)
Payment of wages is classified as a normal running cost of a business, so is stated under revenue expenditure. I got really confused with this one aswell. Anything that is paid regularly and is not a fixed asset or any costs associated with a fixed asset, is capital e.g machinery, improvement, legal fees, delivery. Therefore wages is revenue expenditure, hope this helps.