Notes

Examination text №2.

Two main categories of costs it is operating and overhead costs. Operating costs are incurred by a normal business operations, overheads are the costs for a running business.
Costs can be divided for a several types, but each of cost can be divided for overheads or operation costs. Each of which depends on the nature of the business being run.
Operating costs incurred by a normal operations in business. And these are required and cannot be avoided, because these help to running business. Also these expenses found on the income statement and are components of income profit.
The examples of operating costs it is expenses to materials, labor, machinery used to make a product. One way to determine the operating expenses in business is to think about the costs eliminated by shutting down production for a period of time.
Overheads costs represent more static and pertain to general business functions, such as paying accounting personnel.
These costs are generally ongoing regardless of whether a business makes any revenue. They can be the same amount over time.
Overhead expenses also include marketing and other expenses incurred to sell the product. . These costs still remain if production is shut down for a short period of time.
These expenses can be categorized based on where they fit into the business. They can include administrative overheads, general business overheads, research overheads, transportation overhead, manufacturing overheads.