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    Cost Classification

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    Ashish Devdhe
    This document discusses different ways to classify costs for accounting and management purposes. It describes classifying costs by their nature, function, behavior, relevance to management decisions, production process, and time period. Costs can be grouped as material, labor, expenses or classified under production, administration, selling, R&D. They also differ in being fixed, variable or semi-variable. Classification supports decisions like marginal, differential and opportunity costs. Costs also vary by production method like batch, process, or contract and whether historical, predetermined, standard or estimated.

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    Cost Classification

    Uploaded by

    Ashish Devdhe
    2K views8 pages
    This document discusses different ways to classify costs for accounting and management purposes. It describes classifying costs by their nature, function, behavior, relevance to management decisions, production process, and time period. Costs can be grouped as material, labor, expenses or classified under production, administration, selling, R&D. They also differ in being fixed, variable or semi-variable. Classification supports decisions like marginal, differential and opportunity costs. Costs also vary by production method like batch, process, or contract and whether historical, predetermined, standard or estimated.

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    About cost classification of cost

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    Cost classification.ppt

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    This document discusses different ways to classify costs for accounting and management purposes. It describes classifying costs by their nature, function, behavior, relevance to management decisions, production process, and time period. Costs can be grouped as material, labor, expenses or classified under production, administration, selling, R&D. They also differ in being fixed, variable or semi-variable. Classification supports decisions like marginal, differential and opportunity costs. Costs also vary by production method like batch, process, or contract and whether historical, predetermined, standard or estimated.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    2K views8 pages

    Cost Classification

    Uploaded by

    Ashish Devdhe
    This document discusses different ways to classify costs for accounting and management purposes. It describes classifying costs by their nature, function, behavior, relevance to management decisions, production process, and time period. Costs can be grouped as material, labor, expenses or classified under production, administration, selling, R&D. They also differ in being fixed, variable or semi-variable. Classification supports decisions like marginal, differential and opportunity costs. Costs also vary by production method like batch, process, or contract and whether historical, predetermined, standard or estimated.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 8

    Cost classification

    CAS-1

    Basis of classification :

    Nature of expense Functions / activities Behaviour Management decision making Production Process Time period.

    By Nature of expense:

    Costs should be gathered together in their natural groupings such as material, labour and other expenses. The elements of cost can be classified in the following three categories : i) Material ii) Labour iii) Expenses

    By functions or activities

    Costs should be classified according to the major functions for which the elements are used into the following four major functions : Production; Administration; Selling & Distribution; and Research & Development Expenditure.
    4

    By its behaviour

    Costs are classified based on behaviour as fixed cost, variable cost and semivariable cost depending upon response to the changes in the activity levels.

    management decision making

    Costs are classified for the purpose of management decision making under different circumstances as under :

    Marginal cost Differential cost Opportunity cost Replacement cost Relevant cost Sunk cost Imputed Cost Normal cost Abnormal cost Avoidable cost Un-avoidable

    By nature of production process

    Costs are also classified on the basis of nature of production or manufacturing process. Batch cost Process cost Operation cost Contract cost Joint cost Operating cost
    7

    Classification by time

    Historical cost Pre-determined cost Standard cost Estimated cost

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