TECH 303 Flashcards
Refers to the measure of the cost output relationship. It is concerned with determining money value of inputs (labor, raw material) called as the overall cost of production which helps in deciding the optimum level of production
COST ANALYSIS
Classifications of Costs
According to Elements
According to Traceability
According to Function
According to Behavior
According to Reporting
According to Normality
According to Controllabiility
Amount spent on materials and supplies used to produce the product (Direct)
Material Cost
Amount spent on the salary and wages of the labor to produce a product
Labor Cost
Amount spent in the manufacturing other than materials and labor
Overhead
Cost spent on the manufacturing or production of the product
Production Cost
Costs that are spent in formulating business policies, directing organization and controlling the operation.
Administrative Cost
Cost to create and stimulate demand and secure orders
Selling Cost
Costs that are directly traced to product
Direct Cost
Costs that are indirectly traced to a product
Indirect cost
Sum cost in producing the product. Also called inventoriable sale
Product cost
All cost other than product cost
Period Cost
Cost that remains fixed for a certain volume of output
Fixed Cost
Have the characteristics of both gixed and variable costs
Mixed Cost
Cost proportionally related to the level od output .
Variable Cost
Under to According to Elements
- Material Cost
- Labor Cost
- Overhead
Under to According to Function
- Production Cost
- Administrative Cost
- Selling Cost
Under to Acoording to Traceability
1.
Under to According to Behavior
- Fixed Cost
- Varoable Cost
- Mixed Cost
Under to According to Reporting
- Product Cost
- Period Cost
Under of According to Normality
- Normal Cost (Unavoidable Cost)
- Abnormal Cost (Aviodable Cost)
Under of According to Controllabiility
- Controllable Cost
- Uncontrollable Cost
Your Opportunity Cost is your
Opportunity Loss
Is the total cost cost incurred in production and is comprised of business cost, opportunity cost and normal profit
Full cost
Also called as actual cost is the cost actually incirred by the firm for making all the physical payments and contractual obligations
Explicit Cost
Imputed cost is the implied cost that does not take a form of cash outlatand neither is recorded in the books of account
Implicit Cost
Includes all the cost (fixed, varoable, direct and indirect) incurred in carrying out the operation of the business
Business Cost
