COST ANALYSIS & ELEMENTS OF COST

CLASSIFICATION OF COST
According to.. 1. Nature 2. Function 3. Identifiably 4. Behavior 5. Association With Products 6. Controllability 7. Normality 8. Time 9. Relevance 10.Other Costs

CLASSIFICATION OF COST
1. According To Nature Or Elements

Materials Cost

Labour Cost

Expenses

MATERIAL COST

DIRECT MATERIAL COST

IT IS A COST OF MATERIALS WHICH ENTER INTO & FORM PART OF PRODUCT
e.g. - timber

in furniture making - clay in brick making

INDIRECT MATERIAL COST

IT IS THE COST OF MATERIAL WHICH DO NOT FORM THE PART OF PRODUCT BUT WHICH HELP THE PRODUCTION
e.g LUBRICATING OIL , FUEL etc. Small items like thread, gum , nails etc

Though forms part of product but difficult to calculate cost per unit of that material ----so consider as direct material

LABOUR COST

LABOUR COST
The labour cost is the cost of remuneration of the employees of an undertaking. such as Wages, salaries, commissions, bonus, etc. There are two types of labour cost are 1. Direct Labour cost 2. Indirect Labour cost

EXPENSE COST

EXPENSES COST

The cost of services provided to an undertaking and the notional cost of the use of owned assets. Expenses are two types Direct Expenses Indirect Expenses

1. 2.

OVERHEADS

OVERHEADS
The aggregate of Indirect material cost, Indirect wages and Indirect expenses

Three types such as 1. Indirect material cost 2. Indirect labour cost 3. Indirect expenses

INDIRECT EXPENSES OVERHEADS

1. 2. 3.

Factory overheads Office & administration overheads Selling & distribution overheads

ELEMENTS OF COST
Prime cost Overheads

Direct Direct Direct Material labour expenses Indirect Indirect Material Expenses Labour Indirect

Factory Overheads o

Office & administration overheads

Selling & distribution overheads