This website uses cookies to ensure you have the best experience. Learn more

Classification Of Costs Essay

777 words - 4 pages

_Definition of a cost: physical quantity measurement multiplied by a price measurement.
Meaning of ‘activity’: generally, any physical operation that takes place in an organisation.
Meaning of 'output': Product or Service provided by the organisation.

_Variable costs and fixed costs:
- A variable cost is one, which varies directly with changes in the level of activity, over a defined period of time.
- A fixed cost is one, which is not affected by changes in the level of activity, over a defined period of time.
- Semi-variable = fixed + variable
- Step cost = fixed cost increases by steps. It is fixed over a specified level of activity, but will increase by a further level as the ...view middle of the document...

Indirect costs are also called overhead costs. (Electricity, administration salaries or supervisor, oil).
Some direct costs can be fixed. Variable costs are controllable and fixed costs are not.

_Product costs and period costs:
- Product costs are those costs associated with goods or services purchased, or produced, for sale to customers.
- Period costs are those costs, which are treated as expenses in the period in which they are incurred.

_Costs for planning:
Cost impact of a change in levels of production over a period of time? Fixed and variable.
Cost effect planning to expand operations by a new outlet in a particular location? Direct and indirect.
Cost impact of remaining open for longer hours to improve on existing client services? Fixed and variable.

_Costs for decision-making:
Should the company produce components in this country or produce them overseas? Fixed and variable.
Should the company continue to provide a service when demand is falling? Fixed and variable.

_Costs for control:
How closely do the costs of each product match the targets set? Direct and indirect.
How closely do the costs of a service department match the budget set for the department? Direct and indirect.
Is the value of the inventory (stock) of unsold goods stated correctly? Product and period.


Other Papers Like Classification of Costs

IMPORTER INTERVIEW (arrow furniture) Essay

557 words - 3 pages for duty, origin of imported goods: These factors determine the duty you pay on the imported goods. That is why it is necessary to know the classification, value for duty and origin before you calculate any costs. National Customs Ruling before importing: By obtaining a National Customs Ruling (NCR), it verifies the tariff classification, country of origin and value for duty on imported goods. Getting an NCR is not required, but will save you time

Strategic Management In Banking Industry Essay

647 words - 3 pages Wheldon, “Cost accounting is the application of accounting and costing principles , methods and techniques in the ascertainment of costs and the analysis of saving/or excess cost incurred as compared with previous experience or with standards. Thus , cost accounting relates to the classification, ascertainment of cost and its accounting and control relating to the various elements of cost. It establishes budgets and standard cost and actual cost

Rsm222 Study Note

561 words - 3 pages -indirect labor -factory utilities -supervisory salaries -rent on facilities -maintenance Non-manufacturing costs Selling cost -cost necessary to get the order and deliver the product Administrative Cost -all executive, organizational, and clerical costs. Cost Classification Product costs -include direct materials, direct labor, and manufacturing overhear inventory cost of good sold

Logistics Cost Management of Enterprises

2582 words - 11 pages , travel expenses , etc. [2]. From simple classification speaking, can be divided into inventory costs , transportation costs , management costs three parts. 1 . Inventory costs . Mainly to save the cost of goods , in addition to including the general sense of warehousing ( including: relevant delivery, handling charges , storage charges, down a short fees ) , mutilation , human , insurance and tax costs , but also includes inventory occupied cost


988 words - 4 pages equipment. 0.5 points Question 5 Cost behavior analysis is a study of how a firm's costs A. relate to competitors' costs. B. respond to changes in the level of business activity. C. relate to general price level changes. D. respond to changes in the gross national product. 0.5 points Question 6 Which of the following is not a cost classification? A. Multiple

Hi Ve Broad Purposes Are: Purpose 1: Formulating Overall Strategies and Long-Range Plans. Purpose 2:

558 words - 3 pages Seminar Illustration Seminar Illustration Classification of costs Cl ifi i f Refer to handout Cost item A. Annual retainer paid to a film distributor B. Electricity costs of crescendo store (single b ll covers entire store) ( l bill ) C. Costs of films purchased for sale to customers D. Leasing of computer software used for financial budgeting at crescendo store E. Cost of popcorn provided free to all customers F. F Earthquake insurance policy

Foundational 15 Chapter 1

1583 words - 7 pages labor. There is also indirect labor that goes into producing the desk: example, the factory managers’ salary. This cost would also fall into manufacturing overhead. Manufacturing overhead includes all costs of manufacturing a product other than direct labor and direct materials. It is the easiest classification of the three. All indirect costs, factory utilities, factory taxes, factory depreciation, etc… [pic] Prime costs and conversion

From The Case, Wall Décor Calculates Predeterminated Overhead Rate As Total Estimated Manufacturing Overhead Cost Divided By Total Estimated Cost Of Prints. The Advantage Of Using The Cost Of Each...

1822 words - 8 pages costs 76. A company uses sandpaper in its production process. How is the cost of the sandpaper classified? a. Miscellaneous expense b. A direct material c. A period cost d. An indirect material 77. In which classification would the wages of a factory payroll clerk be classified? a. Raw materials b. Indirect labor c. Period cost d. Direct labor 78. Which one of the following is not a

Pricing Navigation Systems

1075 words - 5 pages Assignment 2: Price Analysis for the Navigation System Robert Gonzalez Professor Stephen Bartorillo BUS 315: Cost and Price Analysis July 26, 2015 Analyze your company’s cost classification for pricing of the navigation system. Defend your cost classification to the US government. Considering that our only competitor in the field of navigation systems is VectorCal, it was important for us to carefully determine pricing that was, not only

Global Wine War

590 words - 3 pages Global Wine War 2009: New World vs. Old The French were able to become the dominant competitors in the increasingly global wine industry due to several factors, such as the large amount of grape growing in France, their focus on large volume production and their classification system. Grape growing accounted for one-sixth of France’s total trading revenue and was the country’s second largest export. Their customer base was small and spread

Plant Maintenance

568 words - 3 pages equipment.  Classification of Breakdown Repairs Break down repairs  Emergency   Downtime cost  High   Normal Deferred Medium Low Maintenance Costs Cost to replace or repair  Losses of output  Delayed shipment  Scrap and rework  Disadvantages of Breakdown Maintenance      Breakdown generally occurs inappropriate times leading to poor and hurried maintenance Excessive delay in production & reduces output

Related Essays

Data Classification Hicca Essay

1047 words - 5 pages classification system will facilitate business activities and help keep the costs for information security to a minimum. Without the consistent use of this data classification system, unduly risks loss of customer relationships, loss of public confidence, internal operational disruption, excessive costs, and competitive disadvantage. B. Applicable Information: This data classification policy is applicable to all information in the

Managerial Accounting Essay

2578 words - 11 pages .) * the flow of costs NOTE that the accumulation of costs is associated with the accumulation of physical units. Hence: Is there a relationship between flow/accumulation of costs and the flow/accumulation of physical units: it is this relationship which we call cost classification. To use cost information effectively, we need to know how costs change or relate to the physical units or volume of activity. Cost Objects are anything for

Accounting Essay

1079 words - 5 pages assigned • Indirect costs are those costs that are common to several cost objects and accordingly, are not directly traceable to any one particular cost object • The functional classification of costs plays a key role in the external reporting activities of a firm • Classifying costs by behaviour is extremely important for the planning and control activities that take place within a firm Functional Classification of Costs • Manufacturing costs are

Marginal Costing Essay

1150 words - 5 pages of a company can be sold. This act of optimization of either sales or production results in a healthy cost control and give maximum profits. 6. Cost Control : Marginal Costing is a technique of cost classification and cost presentation which enable the management to concentrate on the controllable costs. 7. Flexible Budget preparation: As the marginal costing particularly classifies costs as fixed and variable costs which facilitates the