Overview: Normal Costs | ||
Type | ||
Definition | Approximations of production costs based on actual variable costs and estimated overhead. | |
Related Concepts |
What are Normal Costs? John Spacey, updated on
Normal costs are approximations of production costs that are calculated using actual material costs, actual labor costs and estimated overhead. The estimate of overhead is typically based on historical averages or predetermined rates. If the estimate of overhead later turns out to be inaccurate, this can be handled as a variance. Normal costs are used to estimate the cost of goods sold and value of inventory.
Business CostsThis is the complete list of articles we have written about business costs.If you enjoyed this page, please consider bookmarking Simplicable.
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A principle of financial accounting.
Business CostsA list of common types of business cost.Cost Escalation
A definition of cost escalation with an example.
Cost Reduction Examples
Common examples of cost reduction.
Cost Estimates
The common types of cost estimate.
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Detailed examples of how to map out the cost structure of a business.
Cost Competition
The definition of cost competition with examples.
Cost Goals
An overview of cost goals with examples.
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Any risk that people have a strong aversion too.
Risk vs Opportunity
The surprising similarities between risk and opportunity.
Risk Management vs Contingency Planning
The difference between risk management and contingency planning.
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The common types of inventory risk.
Business Risk Management
An overview of common business risk management techniques.
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