Level 4

Costs direct to sales...

I think I understand COGS at this point (though I've seen it used multiple ways), but what is the term used for costs that are particular to a unit sold, as opposed to costs that are not?

 

For example, every time I sell a hog, I have to pay to have it butchered. As far as that cost is concerned, it doesn't matter how many hogs I'm feeding on the farm. What is the term for that kind of cost, one that is incurred upon the sale of one of your products? I used to think that's what COGS is, but I've been told multiple times it's not.

 

On the other hand, I have to feed all hogs on the farm every day. That cost is not dependent upon the number of hogs I sell (unless I don't replace the hogs I sell). What is the term for this kind of cost?

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