Basic Cost Accounting Will Tell Why Salaries Can't Be Increased While Reducing Cost Of Goods/Services At The Same Time
It's a very common demand by Filipino communists to increase salaries while wanting the cost of goods to be lowered at the same time . Such a statement is made out of ignorance. I remembered having my cost accounting classes in college. I decided to dig through cost accounting again to discuss this common sense post. Understanding the basics of production costs This time, I decided to read through Investopedia to find out about production costs . Here's an introduction to how production costs work. Certain points are highlighted in pink (pun intended) to help show how salaries help contribute to an increase in prices in finished goods and services. What Are Production Costs? Production costs refer to all of the direct and indirect costs businesses face from manufacturing a product or providing a service. Production costs can include a variety of expenses, such as labor, raw materials, consumable manufacturing supplies, and general overhead. KEY TAKEAWAYS Production costs re...