Noise pollution is a significant environmental issue, particularly in industrial settings. The constant hum of machinery, the clanging of metal, and the roar of engines contribute to a cacophony that can have serious health implications for workers and nearby residents. Addressing noise pollution in industries is not only a matter of regulatory compliance but also a crucial step in ensuring the well-being of employees and the community. Understanding Noise Pollution in Industries Industrial noise pollution stems from various sources such as heavy machinery, generators, compressors, and transportation vehicles. Prolonged exposure to high levels of noise can lead to hearing loss, stress, sleep disturbances, and cardiovascular problems. Beyond health impacts, noise pollution can also reduce productivity, increase error rates, and contribute to workplace accidents. Regulatory Framework Many countries have established regulations and standards to limit industrial noise. Organizations like t
Cost is the money spent on production and selling a product to the customer. The cost may be direct or indirect cost. The cost of a product starts from procuring the raw materials till selling the product to the customer. The cost includes
1) Manufacturing cost
2) Selling and distribution cost
3) Office and administration cost
Types of cost:
The kind of cost concepts to be used in particular business situation depend on the business decisions to be made. It is important to use the right kind of cost in the business situation.
The following are some of the main cost concepts or cost types. They are
1) Actual costs & Opportunity costs
2) Incremental costs & Sunk costs
3) Explicit costs & Implicit costs
4) Past costs & Future cost
5) Accounting costs & Economic costs
6) Private costs & Social costs
7) Direct costs & Indirect costs
8) Controllable costs & non controllable costs
9) Replacement & Original cost
10) Shut down cost & Abandonment costs
11) Urgent cost & Postponable cost
12) Business cost & Full costs
13) Fixed costs & Variable costs
14) Short run costs & Long run costs
15) Incremental & Marginal costs.
1) Actual costs & Opportunity costs:
Actual cost are also called as acquisition cost, absolute cost or outlay cost. This is the cost which a firm incurs for producing or acquiring a product or a service.
Eg: constant on raw material, labour,rent, interest etc.
Opportunity costs are otherwise called as alternative cost. Opportunity costs of a good or a service is measured in terms of revenue or benefit which could have been generated or earned by employing that good or service in some other alternatives.
2) Incremental costs & Sunk costs:
Incremental cost is the additional cost due to a change in the level or nature of business activity.
Eg: Increase in the present production rate, changing the distribution channel adding new machinery, replacing a machine etc.
Sunk costs are the cost that are not altered by a change in quantity produced and cannot be recovered. Sunk are a part of the outlay costs.
Eg: Depreciation of equipments.
3) Explicit costs & Implicit costs:
Explicit or paid out costs are those expenses which are actually paid by the firm. These costs appear in the accounting records of the firm. It is important for calculating profit.
Eg: Amount paid as rent, wages, utility expenses etc.
Implicit cost or imputed costs are theoritical costs that they go unrecognized by the accounting system. Implicit costs are the costs which are not actually incurred but would have been incurred in the absence of employment of self owned factors.
Eg: In case of a owner, manager very often the cost of the managerial function performed by him is ignored.
An implicit cost is a real cost though it is not recorded in the account book.
4. Past costs & Future costs:
Past costs are the actual costs incurred in the past and are generally contained in the financial accounts. If management feels that the past cost is excessive than they can analyze them to avoid in future but no action can be taken in the past cost.
Future cost are costs that are expected to occur in some future period or periods future cost can be controlled.
5. Accounting costs & Economic costs:
Accounting costs point out how much expenditure has already been incurred on a particular process or an production. These cost are used for tax planning purposes.
Economic costs relate to the future. They are in nature of the incremental costs both imputed and explicit costs as well as the opportunity costs. Economic costs are used in Managerial decision making.
6. Private costs & Social costs:
Private costs are those which are actually incurred or provided for the business activity by an individual or the business firm.
Social costs are the total costs to the society on account Production of goods.
For eg: A firm decides to expand it's business into chemical Industry. Now the firm incurs some cost by establishing the infrastructure this is private cost, because of this expansion the firm is going to pollute the environment, this is societal cost.
7. Direct costs & Indirect costs:
Direct costs are otherwise called as assignable cost or traceable cost. These are the costs that have direct relationship with an Unit of operation like a product a process or a department of the firm. In simple direct cost can be directly identifiable.
Indirect costs or non traceable costs or common or non assignable costs whose course cannot be easily traced to the plant, a product, a process or a department.
Eg: In a manufacturing industry the building cost, land cost cannot be directly attributed to the product and neither their cost per unit of a product can be found.
8. Controllable costs & Non controllable costs:
Controllable costs are those which are capable of being controlled or regulated by the managers.
Eg: Production costs, Sales costs etc.
Non Controllable costs are those which cannot be subjected to administrative controls & supervision.
Eg: Obsolescence cost, Depreciation cost
9. Replacement costs & Original costs:
Original costs are the costs paid for assets such as land, building, cost of plant, equipment & materials etc. at the price paid originally for them.
Replacement costs are the costs that the firm incurs if it wants to replace or acquire the same assets now.
10. Shutdown costs & Abandonment costs:
Shutdown cost are the cost which the firm incurs if it temporarily stops its operation.
Eg: Stopping operation for machine fault
Stopping operation for maintenance.
Abandonment costs are the cost of retiring altogether a fixed assets for use.
Eg: machines specifically designed to produce certain product will be abandoned after.
11. Urgent cost & Postponable cost:
Urgent cost are the costs the firm must incur so that the operation of the firm continue.
Eg: cost of material, labour, fuel etc.
Those costs whose postponement does not affect the operational efficiency of the firm are known as postponable costs.
Eg: Maintenance cost of machinery come under this category.
12. Business costs & Full costs:
Business cost are the ones which are known in the profit & loss account for legal and tax purposes. These costs include all the payments and contractual obligation made by the firm together with the book cost of depreciation on plant and equipment.
Full costs are the sum of opportunity and normal profits. Normal profits are the one that the firm must earn to continue production and stay in business.
13. Fixed costs and Variable costs:
Fixed costs of the firm are that part of the total cost. Which doesn't vary with output. It remains constant. Fixed costs will be incurred even when the output is nil.
For eg: Money invested in buildings, machine cost, property tax etc. will be there as a cost if there is no production.
Total variable cost varies in direct proportion to the changes in volume.
i.e) If the volume of production is less then the total variable cost is less. If the volume of production is high the total variable cost is also high.
14. Shortrun costs and Longrun costs:
The shortrun is defined as a period in which the supply of at least one of the inputs cannot be changed by the firm.
Eg: Inputs like building, machinery cannot be changed by the firm whatever it desires.
Long run is defined as a period in which all inputs can be varied as desired.
Eg: factory installation, level of capacity utilization.
15. Incremental and Marginal cost:
Both Incremental cost and marginal cost are closely related. The similarities and the differences between these two are as follows
a) Marginal cost deals with unit output. Incremental cost is not restricted to an Unit change.
b) Marginal cost is the amount added to total cost by an Unit increase in output.
Incremental cost is related to change in any number of units of output even a change in the quality of the output.
c) Marginal cost concept is important to take decision related to
1) selecting optimum level of inputs
2) selecting least cost combination of inputs.
3) selecting optimum cost combination of inputs.
Incremental cost is important to take decision when two alternatives are to be compared.
Eg: comparing two technical process.
DETERMINANTS OF COSTS:
The cost of production of goods depends on a number of factors. These factors may differ from Industry to Industry. It includes the following factors.1. Level of output:
Larger the output the greater the production cost. Since when there is an increase in production the variable cost increases. Thus the total cost varies directly with output.
2. Level of input:
If the price of the raw materials, labour power increases then naturally the cost of production goes up.
3. Size of plant:
Production costs are usually lower in bigger plants than smaller plants. This is so because larger plants can produce more units and get more profits.
4. Output Stability:
Stability of output leads to saving in various kinds of hidden cost of interruption and learning. Overall cost are generally lower where output is stable and constant over a period of time.
5. Production lot size:
Lot size means the size of the single production job. If the firm is able to process a bigger lot at a time then the total cost of operation and thereby the unit cost will be lower.
6. Level of capacity utilization:
The higher the capacity utilization fixed cost per unit of output is bound to be low.
7. Technology:
Higher utilization of advanced technology will increase the level of production and will leads to decrease in the level of fixed cost per unit.
8. Learning Effect:
If the employees are well versed in latest and advanced technology and if they are able to cope with all the changes means it will decrease the cost per unit.
9. Breadth of Product range:
If the range of product producing is more in one process means the level of fixed cost per unit will decrease.