Cost concept and Classification of B Cost

BY : Mohan Singh 144

INTRODUCTION
Cost : Cost is a measurement, in monetary terms, of the amount of resources used for the purpose of production of goods or rendering services. Cost is measured by the sacrifice made in terms of resources or price paid to acquire goods and services.

BASIS OF CLASSIFICATION
Nature of expense Relation to Cost Centre Functions / activities Behaviour fixed, semi-variable or variable Management decision making Production Process Time period

Nature of expense
Material Labour

Expenses

Relation to Cost Centre

Direct Material Cost Direct Labour Cost Direct Expenses Indirect Material Cost

Indirect Labour Cost

Indirect Expenses

By Functions
Production Administration Selling Distribution Research & Development

By Behaviour
Fixed Variable Semi-variable

For Management Decision Making

Marginal Cost Differential Cost Opportunity Cost Replacement Cost Relevant Cost Sunk Cost

Imputed Cost Normal Cost Abnormal Cost Avoidable Cost Un-avoidable Cost

By nature of production process

Batch Cost Process Cost Operation Cost Operating Cost

Contract Cost
Joint Cost

Classification by time
Historical Cost Pre-determined Cost

Standard Cost
Estimated Cost

THANK YOU