Classification of Cost

Question 1

Categories of Cost

Answer 1

• Classification of cost according to the element
• Cost classification according to function
• Depending on behavior
• According to relevancy
• According to management

Question 2

Types of Classification of Cost according to the Element

Answer 2

1. Direct
2. Indirect

Question 3

It is such a cost that is able to mark directly any particular cost such as raw materials, labor included operating expenses and some other costs are belongs to the

Answer 3

Direct Cost

Question 4

Subcategories of Direct Cost

Answer 4

1. Direct Element
2. Direct Labor
3. Direct Expense

Question 5

opposite side of direct cost

Answer 5

Indirect cost

Question 6

Subcategories of Indirect Cost

Answer 6

1. Indirect Element
2. Indirect Labor
3. Indirect Expense

Question 7

Types of Indirect Overheads

Answer 7

1. factory overheads
2. Selling and Distribution overheads
3. Administration and office overhead

Question 8

refers to that material that is related to the entire finished product

Answer 8

Direct Element

Question 9

means the paid salary to the employee who is directly engaged in manufacturing, handling, and processing a product.

Answer 9

Direct Labor

Question 10

Cost directly related to any particular expense

Answer 10

Direct Expense

Question 11

covering the supervisor’s and the inspector’s salaries.

Answer 11

Indirect Labor

Question 12

These element costs are incurred as a unit.

Answer 12

Indirect Element

Question 13

are house rent, hospital service, lighting, insurance, and welfare trust

Answer 13

Indirect expenses

Question 14

is related to all kinds of indirect costs like manufacturing products and the timekeeper’s salary.

Answer 14

factory overheads

Question 15

is included with advertising expenses and packing materials costs such as free advertising, and marketing on the field.

Answer 15

Selling and Distribution overhead

Question 16

is an expense of office works related expenses such as office lighting, rent welfare trust including here.

Answer 16

Administration and office overhead

Question 17

Cost Classification According to Function

Answer 17

1. Prime cost
2. Product cost
3. Factory Cost

Question 18

is the adjustment of the direct material, direct labor, and direct costs. It is actually the result of these three elements.

Answer 18

Prime cost

Question 19

It means the factory cost with administrative and office overhead.

Answer 19

Product Cost

Question 20

is also known as work cost. It is combined with work costs and work expenses

Answer 20

Factory cost