Financial Control in Hospitality
variable costs are costs that vary with output;
generally variable costs increase at a constant rate relative to labor and capital;
variable costs may include:
materials used in production;
an expense that can be traced directly to (or identified with) a specific cost center or cost object such as a department, process, or product;
direct costs vary with the rate of output but are uniform for each unit of production, and are usually under the control and responsibility of the department manager;
as a general rule, most costs are fixed in the short run and variable in the long run;
also called direct expense, on cost, variable cost, or variable expense, they are grouped under variable costs.
DIRECT COSTS INCLUDE:
materials & Supplies;
An expense (such as for advertising, computing, maintenance, security, supervision) incurred in joint usage and, therefore, difficult to assign to or identify with a specific cost object or cost center (department, function, program). Indirect costs are usually constant for a wide range of output, and are grouped under fixed costs.