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What are Normal Costs?

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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.
Overview: Normal Costs
Type
Definition
Approximations of production costs based on actual variable costs and estimated overhead.
Related Concepts
Next: Cost Of Goods Sold

Business Costs

This is the complete list of articles we have written about business costs.
Abatement
Applied Cost
Business Equipment
Capacity Cost
Capex
Capital Improvement
Carrying Costs
Closing Costs
COGS
Cost Of Capital
Cost Of Revenue
Cost Of Living
Direct Cost
Distress Cost
Expenses
CAC
Fixed Costs
Friction Cost
Employee Costs
Holding Costs
Intangible Cost
Marginal Cost
Operating Cost
Operating Expenses
Opex
Legacy Costs
Outlay Cost
Lifetime Cost
Overhead Costs
Menu Costs
Relevant Cost
Shrinkage
Normal Costs
Sunk Costs
Tangible Cost
Operational Costs
Travel Expenses
Unit Cost
Opportunity Cost
Variable Costs
Prospective Cost
Semi Variable Cost
Step Costs
Switching Costs
Transaction Costs
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