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Bases of Cost Classification
These various bases of cost classification are summarized in the diagram underneath as:
Here, we will usually refer to either of these terminologies every at present and then, in various cost accounting conditions. You will meet them extensively also in Management Accounting in the advanced stages of your course, whereas you will employ their distinction to create suitable profit maximizing management decisions as like budgetary control and planning.
Keep in mind, a cost is basically a measurement or quantification of the economic sacrifice made to get a given objective. Therefore it is a measurement of the amount of resources sacrificed in attaining a particular goal.
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Controllable and Non Controllable Costs Controllable costs can be influenced on the level of authority at that they are being analyzed when non-controllable costs cannot.
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1. when using the internal rate of return method to evaluate capital spending on a new project, the project will be accepted if the internal rate of return is equal to or greater t
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