Cost Descriptors
The successful recognition of a company is not only its innovation, continuing technology development, increase of market share and globalization but also by managing and controlling its products’ costs completely in order to gain more profitability. Cost is one of the main important factors to contribute to the company’s viability and growth. The term “cost” is in very broad meaning that refers to all purchases made by a business whether in cash or on credit. The recent consumer reports have shown that the market is not stable and has become harder for forecasting. Since the market is up and down unpredictably, the attempt to maintain lower prices is a challenge for the human resource Managers and executive leadership. It is critical for the HR managers of any company to understanding the important of the company’s budget in order to make right decisions and forecast projections. This paper will explore different terminologies and breakdown what each means as well as giving specific examples of each term. This report will help the HR Department to become more efficient for the organization. These terms will include fixed, variable, direct and indirect, sunk, marginal, and total cost with the purpose of giving the HR managers the knowledge and understanding to run a business.
Fixed Cost
Fixed cost is the cost that does not vary or change in respect to production sizes or sale levels. Fixed cost is defined as the costs associated with a product that are fixed over a number of units and remain the same even during the hot-sales or busy periods, regardless of the number of units produced or sold. Examples of fixed costs are facility rentals, machines and equipments installations and maintenance, property tax, ...