Question

1. what is the differentiate between fixed cost and variable cost.

2. What is Direct Labor and what can affect the expenditures associated with it.

Answer 1

Q1.

Fixed cost is the cost which remains constant in term of Total cost irrespective of the level of activity within relevant range of activities. However, with the change in level of activity, the fixed cost per unit changes in reverse direction.

Variable cost is the cost which varies in direct proportion in total with the change in level of activity within the relevant range of activity. however, the per unit variable cost remain constant at various levels of activities.

Q2.

Direct labour cost is a labor cost associated directly with the production of goods i.e. which are directly involved in the production of goods and whose and labor cost can be directly identified with the individual unit of product.

The Level of production and direct labour rate per hour are the main factors which affect the expenditure associated with the expediture.