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Cost Sheet Cheat

The document provides a comprehensive overview of business costs, including COGS, cost categories (fixed, variable, semi-variable), and the distinction between direct and indirect costs. It also outlines costing methods, capital expenditures (CAPEX), and operational expenditures (OPEX), highlighting their impacts on financial statements and cash flow. Additionally, it discusses operating leverage and its implications for profit potential and risk.

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Nayem Uddin
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12 views

Cost Sheet Cheat

The document provides a comprehensive overview of business costs, including COGS, cost categories (fixed, variable, semi-variable), and the distinction between direct and indirect costs. It also outlines costing methods, capital expenditures (CAPEX), and operational expenditures (OPEX), highlighting their impacts on financial statements and cash flow. Additionally, it discusses operating leverage and its implications for profit potential and risk.

Uploaded by

Nayem Uddin
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Cost Cheat Sheet

Understanding costs is key to analyzing any business. Here's a quick breakdown:

𝗖𝗢𝗚𝗦 (𝗖𝗼𝘀𝘁 𝗼𝗳 𝗚𝗼𝗼𝗱𝘀 𝗦𝗼𝗹𝗱)


Direct costs tied to producing goods or services sold by a company.
- 𝗗𝗶𝗿𝗲𝗰𝘁 𝗠𝗮𝘁𝗲𝗿𝗶𝗮𝗹𝘀: Raw materials for the product.
- 𝗗𝗶𝗿𝗲𝗰𝘁 𝗟𝗮𝗯𝗼𝗿: Wages tied directly to production.
- 𝗠𝗮𝗻𝘂𝗳𝗮𝗰𝘁𝘂𝗿𝗶𝗻𝗴 𝗢𝘃𝗲𝗿𝗵𝗲𝗮𝗱𝘀: Costs linked to the production process.

𝗖𝗼𝘀𝘁 𝗖𝗮𝘁𝗲𝗴𝗼𝗿𝗶𝗲𝘀
1️⃣ 𝗙𝗶𝘅𝗲𝗱 𝗖𝗼𝘀𝘁𝘀: Constant regardless of production volume (e.g., rent, salaries).
2️⃣ 𝗩𝗮𝗿𝗶𝗮𝗯𝗹𝗲 𝗖𝗼𝘀𝘁𝘀: Change with production volume (e.g., raw materials, direct labor).
3️⃣ 𝗦𝗲𝗺𝗶-𝗩𝗮𝗿𝗶𝗮𝗯𝗹𝗲 𝗖𝗼𝘀𝘁𝘀: Mix of fixed and variable components (e.g., electricity).

𝗜𝗻𝗱𝗶𝗿𝗲𝗰𝘁 𝗖𝗼𝘀𝘁𝘀
Expenses not directly tied to production, classified as operating expenses on the Income Statement.

𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆
- 𝗨𝗻𝘀𝗼𝗹𝗱 𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆: Costs recorded as inventory assets.
- 𝗦𝗼𝗹𝗱 𝗜𝗻𝘃𝗲𝗻𝘁𝗼𝗿𝘆: Transferred to 𝗖𝗢𝗚𝗦 on the Income Statement.

𝗖𝗼𝘀𝘁𝗶𝗻𝗴 𝗠𝗲𝘁𝗵𝗼𝗱𝘀
- Absorption Costing
- Standard Costing
- Variable Costing
- Job Order Costing
- Activity-Based Costing (ABC)
- Process Costing
- Marginal Costing

𝗖𝗔𝗣𝗘𝗫 (𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗘𝘅𝗽𝗲𝗻𝗱𝗶𝘁𝘂𝗿𝗲)


Investments in long-term assets like property, equipment, or major software.
- 𝗟𝗼𝗻𝗴-𝗧𝗲𝗿𝗺: Benefits span several years.
- 𝗖𝗮𝗽𝗶𝘁𝗮𝗹𝗶𝘇𝗲𝗱: Recorded on the balance sheet and depreciated over time.
- 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗜𝗺𝗽𝗮𝗰𝘁: Appears under investing activities.
- 𝗘𝘅𝗮𝗺𝗽𝗹𝗲𝘀: Buying machinery, building renovations.

𝗢𝗣𝗘𝗫 (𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗘𝘅𝗽𝗲𝗻𝗱𝗶𝘁𝘂𝗿𝗲)


Recurring costs for day-to-day operations.
- 𝗦𝗵𝗼𝗿𝘁-𝗧𝗲𝗿𝗺: Expensed fully in the current period.
- 𝗜𝗺𝗺𝗲𝗱𝗶𝗮𝘁𝗲 𝗜𝗺𝗽𝗮𝗰𝘁: Affects operational efficiency and current profitability.
- 𝗖𝗮𝘀𝗵 𝗙𝗹𝗼𝘄 𝗜𝗺𝗽𝗮𝗰𝘁: Reflected under operating activities.
- 𝗘𝘅𝗮𝗺𝗽𝗹𝗲𝘀: Salaries, rent, utilities.

𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗟𝗲𝘃𝗲𝗿𝗮𝗴𝗲
Measures how effectively a business can increase operating income with revenue growth. High leverage =
greater profit potential but also higher risk.

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