Costs can be split into three elements:
Materials – these will include raw materials for a manufacturer, costs of goods to be
resold in a retail organisation or service items or consumables to be used within a
business operation.
Labour – these will include all salary and wages costs to employees, including
overtime, commissions and bonuses.
Other expenses – this will include any other costs that are incurred in the organisations
operations, such as, electricity, depreciation, rent, telephone. Most of these types of
expenses are usually known as “overheads”.