Differences Between Direct and Indirect Costs in Cost Accounting

The two main types of production costs that companies incur are variable costs and fixed costs.

Variable costs change based on the amount of output produced, while fixed costs remain the same regardless of production output.

Three examples of variable costs mentioned in the passage are labor, commissions, and raw materials.

<p>Examples of fixed costs mentioned in the passage include lease and rental payments, insurance, and interest payments.</p> Signup and view all the answers

<p>Factory overhead costs are added to the cost of the final product along with the direct material and direct labor costs.</p> Signup and view all the answers