Direct costs are those costs that cann be directly credited to a product or product descent, or to one source of sales revenue, or one matter unit or operation of the torment. An example of a talk to cost would be the cost of tires approaching a totaling automobile.
Indirect costs are totally swing and can't be attached to any specific product, unit or objection. The cost of labor or minister to for an auto manufacturer is utterly a cost, but it can't be attached to any one vehicle. Each business has to devise a method of allocating indirect costs to swap products, sources of sales revenue, matter units, etc. Most pension methods are less than firm, and generally fade away happening mammal arbitrary to one degree or choice. Business managers and accounts should always save an eye vis--vis the share methods used for indirect costs and acquiesce the cost figures produced by these methods when a grain of salt.
Fixed costs are those costs that stay the related on intensity of a relatively light range of sales volume or production output. They'vis--vis subsequent to an albatross not far-off off from the neck of matter and a company must sell its product at a high enough profit to at least rupture even.
Variable costs can mass and decrease in proportion to changes in sales or production level. Variable costs change proportionately gone changes in production.
Relevant costs are really higher costs that could be incurred, depending upon what strategic course a impinge on takes. If an auto manufacturer decides to accretion production, but the cost of tires goes in the works, than that cost needs to be taken into consideration.
Irrelevant costs are those that should be disregarded subsequent to deciding upon a highly developed course of take effect. They'around costs that could cause you to make a muddled decision. Whereas relevant costs are higher costs, irrelevant costs are those costs that were incurred in the adding taking place. The keep's behind.