But the cost as per f can not be so easily categorized as variable or fixed

But the cost as per f can not be so easily

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But the cost as per (f) can not be so easily categorized as 'variable' or 'fixed', because while for certain quantity of production the electricity consumption may remain same, for increased production, requiring more time for the factory to remain open, the lights and fans may have to be operated for longer duration. But the increased consumption will not be proportional to the increase in production, in any case not at the same rate. This would be a typical instance of semi variable cost. In sum we can end by saying, Fixed Cost are those that normally do not change over a period of time and certain level of activities. Variable Cost on the other hand changes with the volume. However one must always keep in mind, that like anything else in life, Fixed cost will not be the same for perpetuity i.e., beyond a certain time period and volume, Fixed cost can also change. 37
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TERRITORY AND PRODUCT LEVEL PROFITABILITY You will also note that when it comes to per unit application of Fixed Cost you will find that the Rate per unit varies with volume. Whereas in the case of Variable cost the per unit rate remains constant. Apart from these common categorization of costs we can also look at costs from the angle of whether the same are controllable or uncontrollable in the hands of the center head. Controllable costs are those which are controllable in the hands of the cost centre head. Example can be secondary freight on cargo transported from the depot to the distributors where the rate fixation as well as the utilization of the vehicle capacity is in the hands of the centre head. But let us take a situation where the rate is fixed by the head office as well as the load fixation is done by some other location. In such a case the cost is uncontrollable in the hands of the location head. But if it so happens that, while the rate fixation is not done by the cost centre head, the load fixation is very much in his hands then the cost is manageable in his hands. Hence if we say managed costs we are simply trying to see how well has the center head been successful to manage his costs. While on the topic of costs, we shall have a look at a few other instances of costs. Opportunity costs open up appropriate yard sticks to choose between 2 alternatives example opportunity cost of buying a Colour TV is the interest or return on the money invested in purchasing the TV , and against that the purchaser may evaluate the worth of entertainment offered by the CTV at his house, vis a vis the satisfaction he may have derived by spending the money in some other form of entertainment, or simply through earning interest on the money if invested in some bank deposit. Another example can be the opportunity cost of working for self i.e., the earning by self employment vis a vis working for another as an employee.
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