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Could you pls explain what is variable & fixed overheads and what kind of costs they actually are?
I watched ur lecture on cost classification and I know that variable cost is the cost varying with activity levels where fixed cost remain constant with activity levels.
We have direct material and direct labour which is clear to me but variable overheads & fixed overheads are other cost of production (other than material & labour) which is involved with the production of the product?
Yes, there are other costs of production such as the rent of the factory and the maintenance of the machines – they are production overheads (all costs involved in the factory).
Some of them are likely to be fixed (such as the rent of the factory) and others are likely to be variable (like maybe the maintenance of the machines).
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