COST CONCEPTS / CLASSIFICATION OF COSTS

1. According to functions

• Administration cost / office cost
• Selling cost
• Production cost / factory cost / manufacturing cost
• Distribution cost

2. According to the nature of the costs

• Semi - variable or semi-fixed cost
• Step costs
• Fixed cost
• Variable cost

3. According to the controllability

• Uncontrollable cost(Uncontrollable throughout authority and liability laid down by the organizational formation)
• Controllable cost (controllable throughout authority and liability laid down by the organizational formation)

4. According to normality

• Abnormal cost
• Normal cost

5. According to relevance to decision making

• Conversion cost (cost of transforming raw material into finished stock)
• Sunk cost (historical or past paid cost)
• Shut down cost (fixed cost)
• Replacement cost (cost of replacing assets)
• Imputed cost (non- cash cost which is calculated)

6. Others

• Relevant cost and irrelevant cost (relevant to the decision at hand)
• Out of pocket cost (Cash expenses)
• Direct cost and indirect cost (based on traceability to the final product or service)
• Avoidable / escapable and unavoidable costs
• Product costs and period costs (fixed costs and variable costs)
• Opportunity cost (cost of an opportunity lost)
• Imputed or Hypothetical cost (non-cash expenditure)
• Decision making costs and accounting costs
• Differential, incremental or detrimental costs
• Joint costs and common costs etc
• Traceable, untraceable / common costs