![]() This is an assumption since the behavior of actual costs is likely to be non-linear (see Exhibit 3-6) over the range of the cost driver. The relevant range is used to provide a useful range of activity for the cost driver in which it can be assumed that variable costs will be constant per unit of the cost driver. ![]() The relevant range is the range of the cost driver for which total cost is approximately linear. Indirect costs include the machinery, plant and other labor necessary to manufacture the product, but which is not directly traceable to the product, such as labor for inspection and supervision. Direct costs for a manufactured product include the materials (called direct materials) which are part of the product and the labor (called direct labor) which is used to assemble the product. Indirect costs cannot be traced to each cost object. What does Execution costs mean in finance?ĭirect costs can be physically identified with and/or traced to the cost object because there is a direct causal link between them. What is Execution costs? Meaning of Execution costs as a finance term. Definition of Execution costs in the Financial Dictionary - by Free online English dictionary and encyclopedia. Examples of organizational cost drivers at a manufacturing organization include making decisions. Without customer demand for products or services, the organization cannot exist. Share Tweet The most basic cost driver is customer demand. ![]()
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