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Costs - Coggle Diagram
Costs
Major Use of cost data
Cost data are also of great importance to other departments, such as marketing. Marketing managers will use cost data to help inform their pricing decisions.
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Calculating the costs of different options can assist managers in their decision-making and help improve business performance
Cost data are also of great importance to other
departments, such as marketing
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Break even analysis
Advantages
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Comparisons can be made between different options by
constructing new charts to show changed circumstances
Break-even analysis can be used to assist managers when
taking important decisions like location decisions and etc.
Disadvantages
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Not all costs can be conveniently classified into fixed and
variable costs. There is also semi variable cost
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It is also unlikely that fixed costs will remain unchanged at
different output levels up to maximum capacity.
Direct Cost
these costs can be clearly identified with each unit of production and can be allocated to a cost centre.
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Marginal Cost
the extra cost of producing one more unit of output. The marginal costs involved in making one more wooden table are the additional costs of wood, glue and screws plus the labour costs incurred
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