Cost Identification Essay Example | Topics and Well Written Essays - 500 words

Cost Identification - Essay Example This is calculated from the direct cost which includes expenses in issues such as revenues, selling and distribution expenses, as well as the cost of development. Others include government revenue on production, as well as shipping costs. These are coined together as the selling and distribution expenses. The costs are engaged directly by the company in the effort of manufacturing the product and distributing it into the market. The company enlists this expense as the central indicator of their path to achievement (Lenovo, 2013). Subsequently, the company experiences yet another set of expenses that is coined under the name of indirect cost. On reference is the expenses that are associated to proceedings that are not unswervingly connected to the production and sales lines. They include an increase in the cost of production due to issue such as inflation, which foresees the increase in the cost of inputs. Others include restrictions on considerations such as environment pollution. Others include the cost incurred on rent, energy, maintenance and internal communication, amongst others. Such costs are accrued in an effort to better quality of the product but are not specific on the product on reference. They may cover all the products in the production line (Lenovo, 2013). Regarding the variable and the fixed cost, various illustrations focusing on these aspects can be fetched from the financial records of the company. Fixed costs include expenses such as rent (property), equipments and units (plant), amongst others. These costs are constantly engaged with minimal variation. The enlisted variable cost include expenses on topics such as wages, upgrade of infrastructure, payment of leases and other utilities necessitated in the process of production. Such costs are set to vary in the course of production (Lenovo, 2013). A further analysis on the financial records posted by the company identifies yet another set of expenses. This includes the value added