VARIABLE COSTS:
1. RAW MATERIALS
➢ These are the materials used in the cement-making process, including
limestone, clay, silica, and iron ore. The cost can fluctuate based on
market prices and the specific mix required for a given type of cement.
2. ENERGY OR UTILITY COSTS
➢ The manufacturing process of cement is energy-intensive, involving the
use of electricity and fuel for heating, grinding, and other operations.
Variable costs in this category are directly tied to the amount of energy
consumed during production.
3. LABOR COSTS
➢ Variable labor costs encompass wages and salaries paid to production
workers, machine operators, and maintenance personnel. These costs can
vary based on labor intensity and production volume.
4. MAINTENANCE AND REPAIRS
➢ Costs for the maintenance and repair of machinery and equipment used
in the manufacturing process. The more wear and tear on the equipment,
the higher the variable maintenance costs.
5. PACKAGING MATERIALS
➢ This includes the expenses for bags or containers used for packaging the
final product. The cost will depend on the quantity of cement being
packaged.
FIXED COSTS
1. PLANT AND EQUIPMENT
➢ The initial cost and depreciation of machinery, kilns, crushers, and other
equipment used in cement manufacturing. Fixed costs in this category are
incurred regardless of production volume.
2.
FACILITIES
➢ Expenses for the construction, maintenance, and upkeep of
manufacturing facilities and buildings. This includes buildings, roads, and
other infrastructure needed for cement production.
3. ADMINISTRATIVE SALARIES
➢ Salaries of administrative, management, and support staff who oversee
and manage the entire manufacturing operation. These salaries are
generally consistent over time.
4. REGULATORY COMPLIANCE
➢ Expenses for ensuring that the manufacturing operation meets
environmental, safety, and regulatory requirements. These costs are
ongoing and are necessary to maintain compliance with laws and
regulations.