Classifying costs?
Nature-direct, indirect
Function-production, non-production
Behaviour-variable, fixed, semi-variable or stepped
Stepped fixed costs?
Fixed over certain levels of activity and increase when that level is reached. E.g. supervisor salaries and how many staff they manage
Semi-variable costs?
E.g. telephone bill, fixed line rental and varied charges per phone call
Calculation
TC=FC + (VCPU-Vol)
How do you split a semi-variable or mixed cost?
High low method
Capital vs revenue expenditure?
Capital-more than one year
Revenue-less than one year
What is a cost unit, card and centre?
Cost unit-a product or service for which costs are allocated to make a cost card. E.g. 1000 screws
Cost card-summary of the costs involved in producing a unit of a product (cost of 1 unit)
Cost centre-collects points for costs. E.g. factory cost centres such as welding, assembly…
Responsibility centres?
Cost-cost
Revenue-sales
Profit-both
Investment-all
