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In the working of an organization, the profit through various transactions is tracked down through the involvement of various accounts that are further categorized under varied costs. There happen to be set of systems from which one must choose to apply while planning the profit for the future. There are two major cost concepts relating to profit planning are fixed, variable, semi variable costs and future, budgeted costs. Cost Concepts Relating To Profit Planning Assignment Help shall highlight the basic points of these cost concepts.
Types Of Cost Concepts
The different types of cost concepts explained in Cost Concepts Relating To Profit Planning Assignment Help are
• Fixed costs: These are the costs that tend to remain constant over a period of time. These costs are independent of factors like the turnover of a company. These must be paid for under all circumstances. The categories of expenses that can be referred to as fixed costs are salaries of employees, depreciation, security costs, insurances and rents. However, it should not be misunderstood that fixed costs can never change. These are subject to changes too. Like the salaries can increase and so can the rent; pertaining to market conditions. But these remain fixed for a considerable amount of time, and hence the name.
• Variable costs: These are the costs that remain dependent on the turnover either directly or in some proportion. These keep changing too as per the conditional changes in production. The categories that can be considered under variable costs are costs of procurements and other material costs along with the labor charges. For more information on the topic, refer Cost Concepts Relating To Profit Planning Assignment Help.
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• Semi variable costs: These are better known as the mixed costs. It is called so as a part of the mixed costs are fixed and the other half is variable. Although in practice the costs are often divided under these heads; but while grouping it is observed under the mixed category. For instance, the electricity bills have two parts. A fixed amount of money for the service and additional usage charges. Whilst the service charge is the fixed cost, the additional money payable shall be called variable as that keeps varying from time to time as per the requirement. The other cost concept of future cost and budgeted cost shall be discussed in the subsequent points of Cost Concepts Relating To Profit Planning Assignment Help.
• Future cost: This is a major cost concept. It is a matter of great importance as the future cost is under the control of company. It can make changes to the estimations to make more profit or curtail unnecessary extra charges. Future costs are considered after the company has taken up new projects. Pertaining to various possible changes, future cost provides a blue print to the company’s profit planning.
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