Explain the classification of cost

explain the classification of cost Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs its goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability.

It may be recalled that the term ‘cost of capital’ has been used to denote the over­all composite cost of capital or weighted average of the cost of each specific type of funds, ie, weighted average cost. Generally theories of costs can be divided into two parts: traditional theory of costs/short run cost curves: in traditional theory, costs are generalized in two parts on the basis of time period ie costs in short run and costs in long run period. Cost is defined as the value of the sacrifice made to acquire goods or services, measured in dollars by the reduction of assets or incurrence of liabilities at the time the benefits are acquired.

explain the classification of cost Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs its goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability.

Cost classifications for predicting cost behavior how a cost will react to changes in the level of business activity classification of cost 10 other costs avoidable costs conversion costs unavoidable costs time for questions related interests labour economics. State the meaning of cost explain the elements of cost state the meaning of overheads explain the classification of cost 281 cost : meaning and its elements the term ‘cost’ means the amount of expenses [actual or notional] incurred basic cost concepts elementary cost accounting 114 3. Types of costs by behavior cost behavior refers to the way different types of production costs change when there is a change in level of production there are three main types of costs according to their behavior. Cost classification is a simple process in which we group or categorize costs on the basis of common characteristics grouping costs on the basis of their nature, form, source or any other attribution makes it really easy to understand their effects and ultimately to take decisions about costs and.

Cost accounting is an accounting process that measures and analyzes the costs associated with products, production, and projects, so that correct amounts are reported on a company's financial. The following chart shows the various elements of cost and how they are classified direct or indirect materials the materials directly contributed to a product and those easily identifiable in the finished product are called direct materials. There are broadly three elements of cost - (1) material, (2) labour and (3) expenses : the substance from which the product is made is known as material it may be in a raw state-raw material, e. 52 | chapter four • classification of manufacturing costs and expenses cost classification in accounting, the term cost refers to the expenditure or sacrifice made to acquire something of value in financial accounting, all transactions are recorded in terms.

Cost - what is cost in business and accounting, cost is the monetary value that a company has spent in order to produce something types of cost there are a number of different types of costs for a business in this context, variable costs and direct costs are arguably the most relevant. Wage inflation is when workers' pay rises faster than the cost of living this occurs in three situations this occurs in three situations first, is when there is a shortage of workers. Cost classification is the process of grouping costs according to their common characteristics a suitable classification of costs is of vital importance in order to identify the cost with cost centres or cost units cost may be classified accounting to their nature, ie, material, labor and.

explain the classification of cost Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs its goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability.

For the purpose of marginal costing, for the preparation of flexible budget or standards & also for the purpose of controlling overhead costs, behavioral classification is of fundamental importance some of the examples of fixed, variable & semi-variable (or semi-fixed) overhead costs are the following. Cost classification is the process of grouping costs according to their common characteristics and establishing a series of special groups according to which costs are classified thus, it involves two steps. The nature and types of cost classification costs can be classified in a number of different ways: by their behaviour do they increase as an organisation gets busier or do they tend to stay the same this is important when it comes to budgeting as it is essential to be able to predict how costs are likely to change. The types of costs in projects are: fixed, variable, direct, indirect, and sunk costs controlling these costs is imperative to the profitability of a project in this article, you will learn about the types of costs associated in a project, which are then explained by using examples this is a key concept for your pmp preparation related to project cost management.

2-3 © mcgraw-hill ryerson limited, 2001 learning objectives 5 identify and give examples of variable costs and fixed costs and explain the difference in. Cost and cost classifications cost is a sacrifice of resources to obtain a benefit or any other resource for example in production of a car, we sacrifice material, electricity, the value of machine's life (depreciation), and labor wages etc.

Different types of costs profit is the ultimate aim of any business and the long-run prosperity of a firm depends upon its ability to earn sustained profits profits are the difference between selling price and cost of production. There are several costs that a firm should consider under relevant circumstances it is quite essential for a firm to understand the difference between various cost concepts for the purpose of production/business decision making. Classification of cost the various groups, into which costs are classified, are known as ' classes' costs may be classified according to different bases or characteristics, such as 1 on the basis of production and process 2 on the basis of element or nature 3.

explain the classification of cost Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs its goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability. explain the classification of cost Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs its goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability. explain the classification of cost Cost accounting is the process of recording, classifying, analyzing, summarizing, and allocating costs associated with a process, and then developing various courses of action to control the costs its goal is to advise the management on how to optimize business practices and processes based on cost efficiency and capability.
Explain the classification of cost
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