CLASSIFICATION OF COST

COST

the term cost means the amount of expenses incurred to a specified thing or activity.

 Asper ICW act “cost is a measurement in monitory terms of the amount of resources used for the purpose of production of goods or rendering services”

CLASSIFICATION OF COST

cost classification is the process of grouping of cost according to common characteristics. Following are the important cost classifications.

 

1. ACCORDING TO NATURE
2. ACCORDING TO FUNCTION
3. ACCORDING TO IDENTIFIABILITY
4. ACCORDING TO BEHAVIOR
5. ACCORDING TO CHANGE IN VOLUME
6. ACCORDING TO ASSOCIATION WITH PRODUCT
7. ACCORDING TO CONTROLLABILITY
8. ACCORDING TO NORMALITY
9. ACCORDING TO TIME
10. ACCORDING TO RELEVANCE
11. ACCORDING TO MANAGERIAL DECISIONS

1. ACCORDING TO NATURE: total cost can classify on the basis of it's nature. the classification under this head are material cost, labor cost and expenses.