Description
it wud b helpfull 4 mgt students
By: Soni Singh F.Y.MMS 31
?
Classification of cost is the process of grouping of components of cost under a common designation on the basis of similarities of nature, attributes or relation. It is the process of identification of each item and the systematic placement of like items together according to their common features.
? Nature of expense
? Relation to object – traceability ? Functions / activities ? Behaviour fixed, semi-variable or variable ? Management decision making ? Production Process ? Time period
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
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Classification should be on the basis of method of allocation of cost to a cost unit.
If an expenditure can be allocated to a cost centre or cost object in an economically feasible way then it is called direct otherwise the cost component will be termed as indirect.
?
Production.
Administration. Selling.
Distribution.
Research & Development Expenditure.
?
? ?
Fixed Cost.
Variable Cost. Semi-variable Cost.
Historical Cost
Pre-determined Cost Standard Cost
Estimated Cost
doc_429764274.pptx
it wud b helpfull 4 mgt students
By: Soni Singh F.Y.MMS 31
?
Classification of cost is the process of grouping of components of cost under a common designation on the basis of similarities of nature, attributes or relation. It is the process of identification of each item and the systematic placement of like items together according to their common features.
? Nature of expense
? Relation to object – traceability ? Functions / activities ? Behaviour fixed, semi-variable or variable ? Management decision making ? Production Process ? Time period
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
?
Classification should be on the basis of method of allocation of cost to a cost unit.
If an expenditure can be allocated to a cost centre or cost object in an economically feasible way then it is called direct otherwise the cost component will be termed as indirect.
?
Production.
Administration. Selling.
Distribution.
Research & Development Expenditure.
?
? ?
Fixed Cost.
Variable Cost. Semi-variable Cost.
Historical Cost
Pre-determined Cost Standard Cost
Estimated Cost
doc_429764274.pptx