Management Accounting

In corporate costs, costs incur for employee recruitment, development and training are classified as human resource management costs. They include all of the direct costs of recruitment, selection, hiring, and placement, as well as certain indirect costs. Recruitment costs are costs incurred to identify sources of human resources, including those both inside and outside an organization.

Flexible budget variance = Actual result - Flexible budget
= $5500 - $3500 = $2,000.

In customer cost hierarchy, costs of all activities incurred to sell group of units to end consumers are classified as customer batch-level costs. Batch-level costs are expenses related to a group of products that cannot readily be traced back to an individual item. In other words, these production costs are incurred to produce a set of products or a batch and can't be allocated to an individual unit.

Corporate sustaining costs and distribution channel costs are also classified as fixed costs. A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced or sold. Fixed costs are expenses that have to be paid by a company, independent of any specific business activities.

Difference between static budget amount and flexible budget amount is named as sales volume variance. Sales volume variance is the change in revenue or profit caused by the difference between actual and budgeted sales units.

Flexible budget amount = Sales volume variance - Static budget amount
= $8500 - $2000 = $6,500.

In corporate costs, cost incurred to finance construction of new equipment are classified as treasury costs.

Sales mix variance = Budgeted sales - Actual sales
= $35000 - $27000 = $8,000.

Customer sustaining costs, customer batch-level costs and customer output-unit level costs are classified as customer level indirect costs. Indirect costs include administration, personnel and security costs. These are those costs which are not directly related to production. Some indirect costs may be overhead. But some overhead costs can be directly attributed to a project and are direct costs.

For increasing sales, decrease in selling price below selling price list is known as price discount. Typically, a store will discount an item by a percent of the original price. The rate of discount is usually given as a percent, but may also be given as a fraction.