Cost concepts / classification of costs, Cost Accounting

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
Posted Date: 10/15/2012 6:52:11 AM | Location : United States







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