COST CONCEPTS / CLASSIFICATION OF COSTS
1. According to functions
- Administration cost / office cost
- Selling cost
- Production cost / factory cost / manufacturing cost
- Distribution cost
2. According to the nature of the costs
- Semi - variable or semi-fixed cost
- Step costs
- Fixed cost
- Variable cost
3. According to the controllability
- Uncontrollable cost(Uncontrollable throughout authority and liability laid down by the organizational formation)
- Controllable cost (controllable throughout authority and liability laid down by the organizational formation)
4. According to normality
- Abnormal cost
- Normal cost
5. According to relevance to decision making
- Conversion cost (cost of transforming raw material into finished stock)
- Sunk cost (historical or past paid cost)
- Shut down cost (fixed cost)
- Replacement cost (cost of replacing assets)
- Imputed cost (non- cash cost which is calculated)
6. Others
- Relevant cost and irrelevant cost (relevant to the decision at hand)
- Out of pocket cost (Cash expenses)
- Direct cost and indirect cost (based on traceability to the final product or service)
- Avoidable / escapable and unavoidable costs
- Product costs and period costs (fixed costs and variable costs)
- Opportunity cost (cost of an opportunity lost)
- Imputed or Hypothetical cost (non-cash expenditure)
- Decision making costs and accounting costs
- Differential, incremental or detrimental costs
- Joint costs and common costs etc
- Traceable, untraceable / common costs