Cost Descriptor Memo
Memo
To: HR Managers
From:
CC:
Date:
Re: Cost Descriptors
It has been brought to my attention that since we last meet several of you are unclear with the "Cost Descriptor" terms I used in our last meeting. It was not my intent to confuse anyone therefore, I am writing to go over the seven terms I used. They were fixed, variable, direct, indirect, sunk, actual costs and Opportunity Costs. In this memo, I will give you a clear definition as well as an example of each.
Fixed Cost
Fixed costs are costs that are constant from month to month. Fixed costs include items such as rent, car note and insurance. For example, Tom Reality will be leasing office space to conduct business. For the space being leased to us, we must pay a monthly lease fee of five hundred dollars a month. The cost of this space is fixed, because the rent amount stays the same month after month. Fixed cost are cost the must be paid whether or not we open five days or seven (Ward, 2006).......
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