Relevant Costs
Relevant costs are defined as the costs that arise in future and are different for different alternatives. The concept of relevant costs are used by management for making various …
Costing Terms
Differential / Incremental Cost
Differential Cost or Incremental Cost is the difference in total relevant cost between two alternatives. Commonly, these alternatives are ‘make or buy’, ‘two different level of activity’, etc.
Marginal Cost
Marginal Cost is the additional cost that is incurred for producing one additional unit of product. One of the classifications of cost divides all cost between fixed, semi-variable and …
Cost, Costing, Cost Accounting and Cost Accountancy
Cost, costing, cost accounting, and cost accountancy are normally used interchangeably but they are not synonyms of each other. The meaning of these terms is related and similar but …
Classification of Costs based on Functions / Activities
Costs can be classified based on functions or activities in an organization. All the costs of a business can be classified into production costs, administration costs, finance costs, selling …
Material, Labor and Expenses – Classification Based on Nature of Costs
The material, labor and expenses is the common way of classifying costs of any manufacturing business based on the nature of cost. All the costs incurred can be classified …
Types of Costs and their Basis of Classification
Cost classification can be done in various ways depending on its nature and a specific purpose. There are various types of costs classified into logical groupings. These groups are …
Inventoriable and Period Costs
Inventoriable and period costs are also a type of classifications of costs. Inventoriable costs can be defined as costs which become part of inventories such as raw material, work …
Types of Costs and Relationship of Direct & Indirect Costs with Fixed & Variable Costs
Broadly types of costs are classified as direct and indirect, fixed and variable etc. The relationship of direct & indirect costs with fixed & variable costs is a very …
Cost Drivers
In simple terms, cost driver can be defined as the driver of cost. Just like a driver drives the car, cost driver drives the cost. Cost driver has a …