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  • Different Costs

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    The document outlines seven classifications of costs - by nature, behavior, function, planning and control, traceability, controllability, and normality. It also provides examples of types of costs that fall under each classification such as direct material costs, variable costs, product costs, and budgeted costs. Additionally, it summarizes the flow of costs in a manufacturing operation from materials purchases and work in process to finished goods and cost of goods sold on the income statement.

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    The document outlines seven classifications of costs - by nature, behavior, function, planning and control, traceability, controllability, and normality. It also provides examples of types of costs that fall under each classification such as direct material costs, variable costs, product costs, and budgeted costs. Additionally, it summarizes the flow of costs in a manufacturing operation from materials purchases and work in process to finished goods and cost of goods sold on the income statement.

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    8 views1 page

    Different Costs

    Uploaded by

    Get Burn
    The document outlines seven classifications of costs - by nature, behavior, function, planning and control, traceability, controllability, and normality. It also provides examples of types of costs that fall under each classification such as direct material costs, variable costs, product costs, and budgeted costs. Additionally, it summarizes the flow of costs in a manufacturing operation from materials purchases and work in process to finished goods and cost of goods sold on the income statement.

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    © All Rights Reserved
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    There are many different costs (each cost is recorded in a different account) which are essentially classified according

    to their similar characteristics. Here we will be focusing only on seven of such CLASSIFICATIONS:

    BY NATURE or ELEMENT BY BEHAVIOR BY FUNCTION BY PLANNING &


    • Direct material cost • Variable cost • Product cost CONTROL
    • Direct labor cost • Fixed cost • Period cost • Budgeted cost
    • Overhead cost • Mixed cost • Standard cost
    • Overhead cost

    BY TRACEABILITY BY CONTROLLABILITY BY NORMALITY


    • Direct cost • Controllable cost • Normal cost
    • Indirect cost • Uncontrollable cost • Abnormal cost




    In a manufacturing operation, the FLOW OF COSTS is summarized as follows:

    Balance Sheet Income Statement


    (Inventories) (Expenses)
    Materials Purchases Raw Materials
    Product
    Costs Direct Labor Work in Process

    Factory overhead Finished Goods Cost of Goods Sold

    Period Selling, General and


    Costs Administrative Expenses Operating Expenses

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