Ad free CAclubindia and daily updates on your mobile. Subscribe Now!

contribution to production cost

09 March 2019

Pl clarify that interest on working limits and deprec iation has to be considered as variable cost or fixed cost pl suggest me.

Reply
Follow
Share

1 Replies

Karan Mittal (54 Points)
Replied 10 March 2019

Variable costs are the costs which vary with level of production. Since working capital requirements also depend upon the level of production we perform, we can say that interest on working capital will form a part of variable cost.
Depreciation can be variable or fixed depending on the nature of machine.
for example- if the machine life is given in no. of products it will produce, then we can categorise it as variable whereas if it is given in no. of years then we can add it to fixed costs.