COST CLASSIFICATION

Assignment - 3
Functional Traceability Behaviour
Cost Classification
M/S/A/O D/I F/V
1.      Pulp in paper making M D V
2.      Daily wages paid for road construction M D V
3.      Salesman’s salary S I F
4.      Salesman’s samples S I V
5.      Depreciation of machinery (common for all
M I F
products)
6.      Monthly rental A I F
Loss, not a
7.      Fire loss O I cost (Non
-Recurring
8.      Commission paid to sales agency S I V
9.      Commission paid to raw material buying
M D V
agency
10.  Depreciation of delivery truck (fixed trips every
S I F
month)
11.  Rent of office building A I F
12.  Auditors fees A I F
13.  Batteries for a car manufacturer M D V
14.  Insurance premium on company car A I F
15.  Dividend paid to shareholders *** O N/A N/A
16.  Cloth in garment making M D V
17.  Thread in garment making M D V
18.  Lubricating oil for sewing machine M I F
19.  Depreciation of a chemical processing plant and
M I F
machinery
20.  Power to run the machinery M D V
21.  Electricity for lighting the shop floor A I V
22.  Freight-in M D V
23.  Customs duty on raw material M D V
24.  Royalty to author in book publishing M D V
25.  Royalty (lump sum) for using a foreign brand
S I F
name
26.  Helper’s wages in a furniture firm M I F
27.  Nails used in a furniture firm M I V
28.  Advertising expenses S I F
29.  Trade discount (margin to outlets) S I V
30.  Cash discount (for prompt payment) O I V
31.  Expense account for government liaison A I F
32.  Bribes paid O I F
33.  Donations O I F
34.  Overtime (factory workers) M I V
35.  Idle time (accounts clerk) A I F
 36.  Waste of raw material in manufacturing M D V
37.  Bottled perfume; the perfume M D V
38.  Bottled perfume; the bottle M D V
39.  Bottled perfume; the fancy carton for each
M D V
bottle
40.  Cardboard boxes for packaging M D V
41.  Civil engineer’s salary in a construction firm A I F
42.  Advanced basic research O I F

*** DIVIDENDS are neither classified as direct or indirect expenses since the
amount paid as dividends are not in the normal course of business
operations and not correlated to the product of the company. The dividend is
distributed to the shareholders out of profit. But rather a deduction of
retained earnings. Dividends paid does not appear on an income statement
but does appear on the balance sheet. Different classes of stocks have
different priorities when it comes to dividend payments.