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According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?
- a)Costs involved in manufacture, construction, and fabrication of products
- b)Costs incurred in various functions of an organization such as production, administration, selling, and distribution
- c)Selling and distribution costs
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
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According to the cost classification by functions, costs are divided i...
Commercial costs, as per the cost classification by functions, refer to the expenses incurred in the commercial or administrative functions of an organization. These costs are separate from manufacturing and production costs and are considered as indirect costs.
Commercial costs include various expenses related to the general administration, management, and support activities necessary to run the business efficiently. They are not directly associated with the production or manufacturing of goods or services but are essential for the smooth functioning of the organization as a whole.
Here are some key points to understand about commercial costs:
1. Definition:
- Commercial costs are expenses incurred in the administrative functions of an organization.
- They include costs related to general management, administration, and support activities.
2. Nature of Commercial Costs:
- Commercial costs are indirect costs that are not directly related to the production process.
- They are necessary to support the production and distribution of goods or services.
3. Examples of Commercial Costs:
- Administration Costs: These include expenses related to the overall management and administration of the organization, such as salaries of executives, office rent, utilities, office supplies, etc.
- Selling Costs: These include expenses incurred in marketing and promoting the products or services, such as advertising, sales commissions, travel expenses for sales representatives, etc.
- Distribution Costs: These include expenses associated with the distribution and transportation of goods, such as warehousing, packaging, shipping, and logistics costs.
4. Differentiation from Manufacturing and Production Costs:
- Manufacturing and production costs are directly related to the creation of goods or services, including direct labor, raw materials, and overhead costs incurred in the production process.
- Commercial costs, on the other hand, are not directly involved in the production process but are necessary for the overall management and support functions of the organization.
In conclusion, commercial costs are the expenses incurred in the administrative functions of an organization. They include administration costs, selling costs, and distribution costs. These costs are separate from manufacturing and production costs and are considered as indirect costs necessary for the smooth functioning of the organization.
Commercial costs include various expenses related to the general administration, management, and support activities necessary to run the business efficiently. They are not directly associated with the production or manufacturing of goods or services but are essential for the smooth functioning of the organization as a whole.
Here are some key points to understand about commercial costs:
1. Definition:
- Commercial costs are expenses incurred in the administrative functions of an organization.
- They include costs related to general management, administration, and support activities.
2. Nature of Commercial Costs:
- Commercial costs are indirect costs that are not directly related to the production process.
- They are necessary to support the production and distribution of goods or services.
3. Examples of Commercial Costs:
- Administration Costs: These include expenses related to the overall management and administration of the organization, such as salaries of executives, office rent, utilities, office supplies, etc.
- Selling Costs: These include expenses incurred in marketing and promoting the products or services, such as advertising, sales commissions, travel expenses for sales representatives, etc.
- Distribution Costs: These include expenses associated with the distribution and transportation of goods, such as warehousing, packaging, shipping, and logistics costs.
4. Differentiation from Manufacturing and Production Costs:
- Manufacturing and production costs are directly related to the creation of goods or services, including direct labor, raw materials, and overhead costs incurred in the production process.
- Commercial costs, on the other hand, are not directly involved in the production process but are necessary for the overall management and support functions of the organization.
In conclusion, commercial costs are the expenses incurred in the administrative functions of an organization. They include administration costs, selling costs, and distribution costs. These costs are separate from manufacturing and production costs and are considered as indirect costs necessary for the smooth functioning of the organization.
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According to the cost classification by functions, costs are divided i...
Commercial costs, according to the cost classification by functions, include administration costs and selling and distribution costs. Administration costs are the costs incurred in the administrative function of the organization, such as salaries of administrative staff and office expenses. Selling and distribution costs are the costs incurred in the selling and distribution function, such as advertising expenses and transportation costs.
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According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?a)Costs involved in manufacture, construction, and fabrication of productsb)Costs incurred in various functions of an organization such as production, administration, selling, and distributionc)Selling and distribution costsd)None of theseCorrect answer is option 'C'. Can you explain this answer?
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According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?a)Costs involved in manufacture, construction, and fabrication of productsb)Costs incurred in various functions of an organization such as production, administration, selling, and distributionc)Selling and distribution costsd)None of theseCorrect answer is option 'C'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?a)Costs involved in manufacture, construction, and fabrication of productsb)Costs incurred in various functions of an organization such as production, administration, selling, and distributionc)Selling and distribution costsd)None of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?a)Costs involved in manufacture, construction, and fabrication of productsb)Costs incurred in various functions of an organization such as production, administration, selling, and distributionc)Selling and distribution costsd)None of theseCorrect answer is option 'C'. Can you explain this answer?.
According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?a)Costs involved in manufacture, construction, and fabrication of productsb)Costs incurred in various functions of an organization such as production, administration, selling, and distributionc)Selling and distribution costsd)None of theseCorrect answer is option 'C'. Can you explain this answer? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?a)Costs involved in manufacture, construction, and fabrication of productsb)Costs incurred in various functions of an organization such as production, administration, selling, and distributionc)Selling and distribution costsd)None of theseCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for According to the cost classification by functions, costs are divided into manufacturing and production costs and commercial costs. What are commercial costs?a)Costs involved in manufacture, construction, and fabrication of productsb)Costs incurred in various functions of an organization such as production, administration, selling, and distributionc)Selling and distribution costsd)None of theseCorrect answer is option 'C'. Can you explain this answer?.
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