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Is the cost of delivering raw materials are indirect production cost or non – production cost.
They are included in production costs.
Delivering raw materials to the customers
Are a distribution cost ,
And so it’s an non production cost
As it’s not the cost that is incurred within the factory (where they produce the products )
Hope the concept or the logic is clear
But a company does not deliver raw materials to customers – they deliver finished goods to customers!!
Raw materials are delivered to the company from suppliers, and the cost of delivery is a production cost (effectively it increases the cost of the raw materials).
If Total cost = Fixed cost + Variable cost.
But in Quize, question number 2, there is a solution where Total cost = Fixed cost – variable cost.
What is the reason for that?
Please start a new thread when you are asking about a different topic – this thread is about the cost of delivering raw materials to customers.
Also, if you want me to answer then you must ask in the Ask the Tutor Forum. This forum is for students to help each other.
Please do say which quiz you are referring to.
If you are referring to question 2 of the test on Chapter 4 of the lecture notes, then the answer is correct. It is testing the high low method and the answer does not say that total cost = fixed cost – variable cost.
Did you watch the free lectures on the high low method before attempting the test?