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appropriate derivation of a cost

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One member of your team emailed you and stated that she believes Claire's Antiques should work to convert the fixed costs to variable costs. She wants to know if this is a good idea. Why or why not? If not, then when would it be a good idea? Reply to your friend with the answers to her questions. In your reply, identify the types of costs Claire's Antiques would probably incur that are fixed.

Objective: Explain how to arrive at the appropriate derivation of a cost.
Use effective communication techniques.

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The response addresses the queries posted in 321 words with references.

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The response addresses the queries posted in 321 words with references.

// Before discussing how to change Fixed Cost into Variable Cost, we should know what exactly these costs are. So, we have to describe the meaning of these costs at the first place under the heading of introduction.//

Introduction

In a business, the cost is referred as the amount that is spent on the production of a unit or service. In the cost, labor and time is also included. Generally, an organization bears two type of costs, fixed and variable cost. Fixed cost is the cost which tends to remain constant for all level of activity within a certain range. The cost that increases or decreases exactly in the same proportion, in which the volume of output increases or decreases is known as the variable cost. It consists of direct material and labor cost (Types of Cost Estimates).

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  • MBA (IP), International Center for Internationa Business
  • BBA, University of Rajasthan
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