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Administrative
Costs
Administrative costs are usually not driven to the product.
These costs are reported separately and include:
- Sales people salary and associated costs
- Upper Management salary and costs
There is a good reason that these costs are not part of burden
and are not included in the product price.
The administrative people are usually working for more than
one plant or business. They may also be working on several
different projects.
To try and determine these costs for plant or business in often
difficult. The costs are usually allocated to several locations and
projects.
The Cost Accountant or whoever is doing the budgeting, will receive
these costs from Management. She will then simply add this
amount to the budget.
Each month these costs are recorded in the general ledger.
The costs are also reported on the income
statement.
Other cost
elements:
Direct
Labor
Indirect
Labor
Material
Costs
Burden
Costs
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