1. Business Studies & its Various Costs

2. Cost refers to the expenses incurred in the manufacturing of goods and services. There are various types of costs which are to be studied in order to solve business studies assignments properly. The different types of costs are studied in detail in a major discipline in business studies known as Cost Accounting.

3. 01 Direct Costs 02 03 04 05 Operating Costs Variable Costs Indirect Costs Fixed Costs

4. 1. Direct Costs 1. Direct Costs Direct costs constitute the material, labor, expenditure on machinery and distribution costs which are used in the manufacturing of a product of a service.

5. 2. Indirect Costs These costs are not directly linked to the production process. For example, a company has rented an office. Its electricity bill is common with other offices in the building. So, it is difficult to link it directly to the costs of the company.

6. 3. Fixed Costs 3. Fixed Costs These are the costs which the company has to pay and it is not affected by the production of goods or services.

7. 4. Variable Costs 4. Variable Costs These are the costs which vary or fluctuate with the level of production. If the production output increases, the variable costs increase.

8. 5. Operating Costs These costs are associated with the daily business activities. These may be fixed or variable. For example, a company’s inventory is an example of operating cost. The materials required to be stored which are used in the manufacturing of the products or services are an operational cost to the company.

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