Classification of costs with examples and
describe how costs can be classified giving examples in each classification. explain how the different cost classifications can assist management in decision making
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What is the various information that a manager need to make a decision?
Capital Budgets: The procedure of finding out which potential long-term projects are value undertaking, by comparing their estimated discounted cash flows with their internal rates of return. Capital Budget is the
Standard Costing: A costing technique which joins costs to cost objects based on reasonable approximations or cost studies and by the means of budgeted rates instead of according to actual costs incurred. The predictable cost of gener
Accounts used in governmental accounting to record the budget amounts but not the actual amount. For example, at the beginning of the accounting period, the planned amount of tax revenue, revenue from license, and inflows from fines would be recorded as one amount in
Briefly describe the main purpose of the business?
Avoidable Cost: The cost related with an activity which would not be acquired if the activity were not executed.
Incremental Cost: The raise or reduction in total costs which would result from a decision to raise or reduce output level, to add a service or task, or to modify any part of operations. This information aids in making decisions such
Significant costs associated with the disposal of asset. Accounting for asset retirement obligations requires estimating the cost and discounting estimate. The present value added to the asset's depreciable base and a liability is recorded for the obligation. Every year, interest expense is added
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