Staff Costs – Definition.
Expenditure incurred for staff time used to deliver projects
. Example – Annual salary, national insurance, pension contributions, employer’s contributions for NI and pension, any other contractual. payments included in the employee contract.
Is outsourcing a fixed or variable cost?
It’s all on you. In outsourcing to vendors for particular services, you shift the fixed costs away from yourself and toward those vendors. Your
costs become variable
—you only pay for the work you need.
Is staffing a fixed or variable cost?
The
labor cost is considered a fixed cost
. When you pay only for the number of hours worked on an as-needed basis – which is usually the case when hiring temporary or contract laborers or piece-workers – then it is considered a variable cost. It goes up or down with production.
What are examples of variable costs?
Common examples of variable costs include
costs of goods sold (COGS), raw materials and inputs to production, packaging, wages, and commissions
, and certain utilities (for example, electricity or gas that increases with production capacity).
What are some variable costs for a business?
- Raw materials.
- Sales commissions.
- Packaging.
- Shipping.
- Labor directly associated with production.
- Credit card fees.
What are examples of period costs?
Other examples of period costs include
marketing expenses, rent
(not directly tied to a production facility), office depreciation, and indirect labor. Also, interest expense on a company’s debt would be classified as a period cost.
Is salary a fixed cost?
Common examples of
fixed costs
include rental lease or mortgage payments, salaries, insurance, property taxes, interest expenses, depreciation, and potentially some utilities.
Can fixed costs become variable costs?
Total cost is the sum of fixed and variable costs. … Fixed costs (also referred to as overhead costs) tend to be time related costs including salaries or monthly rental fees. Fixed costs are
only short term and do change over time
. The long run is sufficient time of all short-run inputs that are fixed to become variable.
Does outsourcing reduce variable cost?
Outsourcing decreases costs of business operation by shifting the fixed cost to variable costs
(Assaf & Al-Nehmi, 2011;Koh Ser Mui, 2003; Liu & Tyagi, 2016) .
What are the disadvantages of outsourcing?
- service delivery – which may fall behind time or below expectation.
- confidentiality and security – which may be at risk.
- lack of flexibility – contract could prove too rigid to accommodate change.
- management difficulties – changes at the outsourcing company could lead to friction.
What are 5 examples of variable expenses?
- Direct materials. The most purely variable cost of all, these are the raw materials that go into a product.
- Piece rate labor. …
- Production supplies. …
- Billable staff wages. …
- Commissions. …
- Credit card fees. …
- Freight out.
What is fixed cost and variable cost with example?
Fixed costs are time-related i.e. they remain constant for a period of time
. Variable costs are volume-related and change with the changes in output level. Examples. Depreciation, interest paid on capital, rent, salary, property taxes, insurance premium, etc.
Is rent a variable expense?
Fixed expenses: These are costs that largely remain constant, such as your monthly rent. Variable expenses: These are
costs that vary or are unpredictable
, such as dining out or car repairs.
What is another name for variable cost?
Variable costs are sometimes called
unit-level costs
as they vary with the number of units produced. Direct labor and overhead are often called conversion cost, while direct material and direct labor are often referred to as prime cost. In marketing, it is necessary to know how costs divide between variable and fixed.
How do you calculate variable costs?
To calculate variable costs, multiply what it costs to make one unit of your product by the total number of products you’ve created. This formula looks like this:
Total Variable Costs = Cost Per Unit x Total Number of Units.
Are wages variable costs?
Variable costs vary with increases or decreases in production. … Wages paid to workers for their regular hours are a fixed cost.
Any extra time they spend on the job is
a variable cost.
