concept and classification of costs.

Cost classification is the process of grouping costs according to their common characteristics. It is the placement of like items together 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 according to their nature, i.e., material, labour and expenses and a number of other characteristics. The same cost figures are classified according to different ways of costing depending upon the purpose to be achieved and requirements of particular concern. The important ways of classification are:

(1)

By Nature of Element

(2)

By Functions

(3)

As Direct and Indirect

(4)

By Variability

(5)

By Controllability

(6)

By Normality

(7)

By Capital or Revenue

(8)

By Time

(9)

According to Planning and Control

10

For Managerial Decisions.
 

Download Files

cm-lec2.ppt (0.10 MB )