👉UNDERSTANDING COST TYPES
⭐️1.Direct Cost vs. Indirect Cost
Direct Cost
⏺These costs are directly linked to a specific project, task, or activity.
⏺They vary depending on the project’s scope and progress.
⚡️Examples: Raw materials used in construction (cement, steel, bricks) Wages of laborers and site engineers assigned to a project Subcontractor costs for specific project tasks Equipment or machinery rented for a particular project
⭐️Indirect Cost
⏺These are overhead costs that support multiple projects but are not tied to a specific activity.
⏺They remain relatively constant regardless of individual project progress.
⚡️Examples: Office rent, utilities, and administrative salaries IT infrastructure and software licenses Safety training, legal compliance, and insurance Company-wide marketing and management expenses
📜2.Fixed Cost Vs Variable Cost
🔰Fixed Cost
⏺Costs that remain constant regardless of project activity or production levels.
⏺They do not fluctuate with the volume of work performed.
⚡️Examples: Office rent and administrative salaries,Equipment depreciation ,Long-term leasing of machinery or site offices Insurance and permit fees.
🔰Variable Cost
⏺Costs that change depending on the level of production or work performed.
⏺These expenses fluctuate as project activity increases or decreases.
⚡️Examples: Wages of temporary laborers hired per project phase,Fuel costs for site equipment and vehicles,Cost of materials (cement, steel, sand) based on demand ,Utility bills (electricity, water) that vary with usage
🔰3.Operational Cost
⏺These are ongoing expenses required to maintain daily business or project operations.
Unlike capital costs (one-time investments in assets), operational costs are recurring.
⚡️Examples: Salaries of permanent employees
,Maintenance and repair of machinery and equipment
Fuel, utilities, and transportation expenses,Office supplies, communication, and IT support
@etconp
⭐️1.Direct Cost vs. Indirect Cost
Direct Cost
⏺These costs are directly linked to a specific project, task, or activity.
⏺They vary depending on the project’s scope and progress.
⚡️Examples: Raw materials used in construction (cement, steel, bricks) Wages of laborers and site engineers assigned to a project Subcontractor costs for specific project tasks Equipment or machinery rented for a particular project
⭐️Indirect Cost
⏺These are overhead costs that support multiple projects but are not tied to a specific activity.
⏺They remain relatively constant regardless of individual project progress.
⚡️Examples: Office rent, utilities, and administrative salaries IT infrastructure and software licenses Safety training, legal compliance, and insurance Company-wide marketing and management expenses
📜2.Fixed Cost Vs Variable Cost
🔰Fixed Cost
⏺Costs that remain constant regardless of project activity or production levels.
⏺They do not fluctuate with the volume of work performed.
⚡️Examples: Office rent and administrative salaries,Equipment depreciation ,Long-term leasing of machinery or site offices Insurance and permit fees.
🔰Variable Cost
⏺Costs that change depending on the level of production or work performed.
⏺These expenses fluctuate as project activity increases or decreases.
⚡️Examples: Wages of temporary laborers hired per project phase,Fuel costs for site equipment and vehicles,Cost of materials (cement, steel, sand) based on demand ,Utility bills (electricity, water) that vary with usage
🔰3.Operational Cost
⏺These are ongoing expenses required to maintain daily business or project operations.
Unlike capital costs (one-time investments in assets), operational costs are recurring.
⚡️Examples: Salaries of permanent employees
,Maintenance and repair of machinery and equipment
Fuel, utilities, and transportation expenses,Office supplies, communication, and IT support
@etconp