Management accounting cost classification essay

Costs can be classified into different categories for different purposes. Costs may be categorized according to their: According to Management Function 1. Manufacturing costs - incurred in the factory to convert raw materials into finished goods.

Management accounting cost classification essay

For example, in some companies, machine cost is segregated from overhead and reported as a separate element altogether, and payroll costs are sometimes separated form other production costs.

Management accounting cost classification essay

Classification of costs[ edit ] Classification of cost means, the grouping of costs according to their common characteristics.

The important ways of classification of costs are: By Nature or Traceability: Direct Costs and Indirect costs. Direct costs are assigned to Cost Object. Indirect costs are allocated or apportioned to cost objects. Costs are classified according to their behavior in relation to change in relation to production volume within given period of time.

Fixed Costs remain fixed irrespective of changes in the production volume in given period of time. Variable costs change according to volume of production. Semi-variable costs are partly fixed and partly variable.

Controllable costs are those which can be controlled or influenced by a conscious management action. Uncontrollable costs cannot be controlled or influenced by a conscious management action.

Normal costs arise during routine day-to-day business operations. Abnormal costs arise because of any abnormal activity or event not part of routine business operations. Historical costs and predetermined costs. Historical costs are costs incurred in the past.

Essays on Cost Accounting. Free Examples of Research Paper Topics, Titles GradesFixer

Predetermined costs are computed in advance on basis of factors affecting cost elements. By Decision making Costs: These costs are used for managerial decision making.

Marginal cost is the change in the aggregate costs due to change in the volume of output by one unit. This cost is the difference in total cost that will arise from the selection of one alternative to the other. It is the value of benefit sacrificed in favor of an alternative course of action.

The relevant cost is a cost which is relevant in various decisions of management. This cost is the cost at which existing items of material or fixed assets can be replaced.

Thus this is the cost of replacing existing assets at present or at a future date. These costs are the costs which are incurred if the operations are shut down and they will disappear if the operations are continued. These costs are normally fixed costs.

The cost incurred by a company for providing production, administration and selling and distribution capabilities in order to perform various functions. The specific problem is:Introduction to Cost and Management Accounting Notes Essay.

A+. Pages:6 Words This is just a sample. To get a unique essay. Cost Classification for Decision Making We will write a custom essay sample on Introduction to Cost and Management Accounting Notes specifically for you.

for only $ $/page. . Management Accounting - Cost Classification. COST CLASSIFICATION ASSIGNMENT To classify the various costs would first of all require a definition between the two types of accounting that practically all businesses have to face and a number of key terms which are equally important.

COST CLASSIFICATION ASSIGNMENT. To classify the various costs would first of all require a definition between the two types of accounting that practically all businesses have to face and a number of key terms which are equally important.

These are management accounting and financial accounting. 1. COST MANAGEMENT Essays: Over , COST MANAGEMENT Essays, COST MANAGEMENT Term Papers, COST MANAGEMENT Research Paper, Book Reports. ESSAYS, term and research papers available for UNLIMITED access.

Essay on Management Accounting MANAGEMENT ACCOUNTING The Management Accountant in Business COST CLASSIFICATION ASSIGNMENT To classify the various costs would first of all require a definition between the two types of accounting that practically all businesses have to face and a number of key terms which are equally important.

Management Accounting – Cost Classification. 1 pages words. This is a preview content. A premier membership is required to view the full essay.

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