COGS Affected by Non-Financial Factors
Regrding the example given to explain how COGS can increase due to non-financial factors like stoppages of production lines, actually I could not understand how such a problem will not be reflected in the cost of maintenance [more breakdowns means more maintenance], utilities cost [more breakdowns means more utility cost per unit]
Can someone please explain this?
1 answers ( 0 marked as helpful)
Hi Eslam,
Good to hear from you!
A stoppage could be cheap to repair, but if technicians don't come on time then you will have a much higher opportunity cost due to missing production. Hope this makes sense.
Best,
Ned
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