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November 12, 2022 at 10:54 am
…now thinking about it rent of the factory or production plant is a direct overhead?
But: The fixed salary of a production manager surely would be a fixed direct cost.
November 12, 2022 at 10:04 am
It is hard for me to agree that ALL direct costs are ALWAYS variable costs. The rent of a factory used exclusively production, surely is a direct cost. In these businesses the administrative (operational) buildings are often split from the factory, so that the rent of the factory (where production occurs) is separate from the rent of the administrative premises (where support staff are located).
There are examples outside of manufacturing as well. But I will accept that for the purposes of completing P1 I have to give the markers what they want. I am however doing the FLP program which is more closely related to the working world. So I will need to make a mental note of that.
November 12, 2022 at 10:26 am
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