Costs that must be incurred to produce or sell a service or a product are considered variable. These include raw materials, cost of inventory, hourly wages, and in some situations, utilities. These costs are a part of the contribution margin formula of Sales less Variable Costs equals Contribution Margin.
The science of calculating the actual costs of manufacturing is known as cost accounting, a.k.a managerial accounting. Unlike traditional accounting which records economic transactions after they occur, cost accounting identifies all underlying costs associated with […]