What Is a Normal Cost?

The basic cost is a "general cost" symmetry. In the production of products, various expenses incurred to meet the needs of the process. For example, the raw material costs that constitute the product entity are directly used for product production, auxiliary material costs that contribute to product formation, fuels used in the process, power costs, and wages and labor welfare funds, machinery and equipment for production workers. Depreciation fees, etc. In the case of a single product, the "base cost" is the "direct cost". Such as the raw materials that constitute the product entity. However, in the case of producing multiple products, the basic costs incurred are not always direct costs, but indirect costs that need to be allocated. ^[1]

Basic cost

Right!

The basic cost is a "general cost" symmetry. In the production of products, various expenses incurred to meet the needs of the process. For example, the raw material costs that constitute the product entity are directly used for product production, auxiliary material costs that contribute to product formation, fuels used in the process, power costs, and wages and labor welfare funds, machinery and equipment for production workers. Depreciation fees, etc. In the case of a single product, the "base cost" is the "direct cost". Such as the raw materials that constitute the product entity. However, in the case of producing multiple products, the basic costs incurred are not always direct costs, but indirect costs that need to be allocated. ^[1]

Chinese name

Basic cost

Explanation

Means the necessary expenses to ensure the normal operation of the business,

Introduction 1

Personal expenses and daily business expenses

nickname

Fixed costs

1. Basic expenses refer to personal expenses and daily business expenses, which are determined according to the number of employees in each county (city) branch and used for contract. From the perspective of lease time, the lease period generally accounts for most of the asset's useful life. The factor of intangible loss can be considered that the lease is consistent with the life of the asset

2.Basic expenses refer to the necessary expenses to ensure the normal operation of the business.The amount of the basic expenses does not change with the increase or decrease of the business volume within a certain period and within a certain range, and the relevant costs that remain unchanged at all times shall be regarded as fixed expenses

3. In the remaining cases, maintenance is performed by internal employees. In this case, labor costs are limited to workers' salaries and are called "basic costs." More reasonable internal worker employment costs should also include some daily management costs and overtime costs. Corrections based on basic costs to compensate workers for daily overhead and overtime