Relevant Costs
1. Basic production costs: Fixed and variable costs in production line in a given period of time. Included are direct and indirect labor costs, overtime compensation.
2. Costs associated with changes in the production rate: Hiring, training and laying off personnel. Hiring temporary help is a way of avoiding these costs.
3. Inventory holding costs: Storing, insurance, taxes, obsolescence.
4. Backordering cost: Cost of expediting, loss of customer goodwill, loss of sales revenue.