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Variable costs are cost that change depending on the volume of sales. An example of a variable cost is the cost of goods sold. Variables costs are controllable because project managers can implement strategies to lower variable costs such as changing suppliers to reduce the cost of materials.
Two additional categories of costs are direct and indirect costs. Direct costs are costs that are directly attributed to the production output. Some examples of direct costs are materials and direct labor. Indirect costs are costs that are not associated with the production of a firm. Examples of indirect costs include supervisor salaries, indirect labor, and supplies used (Referenceforbusiness). Other cost categories are period and product costs Period costs are costs that are identified with a specific period of time, while production costs are necessary for producing a finished good. The different types of costs help project managers differentiate among the types of costs that affect a project.
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