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3.2 COSTS AND REVENUES (TYPES OF COSTS (FIXED COSTS (COSTS THAT ARE FIXED…
3.2 COSTS AND REVENUES
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MAJOR USES OF COST DATA
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KEEPING COST RECORDS ALLOW COMPARISON WITH THE PAST PERFORMANCE OF BUSINESS TO ASSESS PRODUCTS PROFITABILITY
BUSINESS COSTS ARE A KEY FACTOR IN THE PROFIT EQUATION BECAUSE WITHOUT IT, PROFITS AND LOSSES CANT BE CALCULATED TO MAKE BUSINESS PLAN.
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TYPES OF COSTS
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INDIRECT COSTS
COST WHICH CANNOT BE IDENTIFIED WITH A UNIT OF PRODUCTION OR ALLOCATED ACCURATELY TO A COST CENTRE. ALSO KNOWN AS OVERHEAD COST
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SEMI-VARIABLES
HAVE BOTH FIXED AND VARIABLES COSTS ELEMENTS-EG: SALESPERSON'S FIXED BASIC SALARY PLUS COMMISION THAT VARIES WITH SALES
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