Fixed and Variable Compliance Cost

Topics: Cost, Costs, Variable cost Pages: 1 (317 words) Published: November 11, 2012
Agri-environment contract adoption under fixed and variable compliance costs. This report looks at the agri-environment contract adpted by farmers’ to be able to contribute and partake in the enrivonmental schemes through pressure groups and government. It provides disctinct description to the differences in fixed and variable costs. The purpose of explaining the differences were to illustrate how farmers partaking to the project would be different than how much land will be needed to chip in the project. Land, in acres, are, of course, described in terms of fixed costs, and farmer’s wages, living expenses and such would be seen as variable costs. The hopes of this paper was to observe how fixed costs, such as small machinery, that were seen as unimportant or insignificant also actually made a difference. It also looked at the nature of costs – as in direct material, direct labour and other variable costs, as well as fixed costs, such as land, machinery, fixed transaction costs and compliance costs. In fact, in conclusion of the report, it was found that the smallest farms had majorly affect on those insignifant costs, which were truly important, such as those fixed compliance costs and fixed transaction costs etc. This article assumes that in accounting, fixed and variable compliance costs can be overlooked at times, as it is the expenditure of time and money in conforming with government requirements, in this case, the agri-environment contract. These compliance costs are seen as unnecessary in the field, however, once farmers hire skilled people in the field, who may help them keep detailed records and aid in participating in the environmental scheme, thus, these variable costs can ultimately save them a lot of money through fines and extra taxes etc. The relevance of this article to look at variable costing is the importance of different types of variable costing, even though it may be seen as unnecessary.
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