A common cost is a cost that is common to a number of costing objects but cannot be traced to them individually. For example, the wage cost of the pilot of a 747 airliner is a common cost of all of the passengers on the aircraft. Without the pilot, there would be no flight and no passengers. No part of the pilot's wage is caused by any one passenger taking the flight.
Costs that are incurred in the supply of all or a group of services provided by the firm and cannot be directly attributed to any one service. Common costs arise from the existence of economies of scope.
Costs that will remain the same regardless of the method of delivery. These costs must be identified but are not included in the bid evaluation step since they are the same for all proponents.
Costs that are common to several products, processes, activities, departments, territories, etc. Often common costs are subsequently allocated to each of the joint products, joint processes, etc. in order to determine the cost of each. To Top