What is cost classification?
The arrangement of cost items into logical groups
Give the 3 examples of cost classification.
- Type
- Function
- Nature
Examples of cost classification by their type.
Capital and revenue expenditure
Examples of cost classification by their function
Administration
Production
Give examples of cost classification by their nature
Materials
Labour
What is the eventual aim of costing?
To determine the cost of producing a product/service
What are the 2 types of expenditure talked about?
Capital and revenue expenditure
What things does capital expenditure include? (2)
- Purchase of NCAs
- Improvement of the earning capability of NCAs
What things does revenue expenditure include? (3)
- Purchase of goods for resale
- Maintenance of the existing earning capacity of NCAs
- Expenditure incurred in conducting the business
What is capital expenditure in the accounts?
Shown as NCA in the SoFP
What is revenue expenditure in the accounts?
Charged as a cost in the SPL
A company may also arrange cost items into groups by function.
What does this mean?
Which part of the business the cost relates to
At the highest level of classification of total costs, what are the 2 groups?
Groups of production costs
Groups of non-production costs
What are production costs?
Costs associated with the production of goods and services, from the supply of raw materials to the warehousing of finished goods
What are non-production costs?
All other costs incurred in the business
Production costs can then be broken down further from function into what?
Nature
What is classification by nature?
Category of cost that has been incurred
What 3 things can production costs be broken down into?
- Materials
- Labour
- Overheads
What are materials?
Cost of materials that are used in making the product or service
What is labour?
Cost of workforce used in making the product
What is overheads?
Cost of any overheads required to support the production process
How can breaking down non-production costs by their nature aid?
Aids analysis
What 4 things can non-production costs be broken down into?
- Administration
- Marketing
- Distribution
- Finance
What is marketing?
All costs incurred in promoting and retaining customers
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Chapter 1 Costing techniques: Section intro and 1: Cost behaviour and output20
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Chapter 1: Section 2 Determining the fixed and variable elements of semi-variable costs8
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Chapter 1: Section 3 Cost classification34
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Chapter 1: Section 4 Responsibility centres0
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Chapter 1: Section 5 Methods of costing7
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Chapter 1: Section 6 Absorption costing0
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Chapter 1: Section 7 Marginal costing0
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Chapter 1: Section 8 Marginal and absorption costing, inventory levels and profit0
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Chapter 1: Section 9 Comparison of absorption and marginal costing0
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Chapter 2 Forecasting techniques: Section 1 Time Series analysis0
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Chapter 2: Section 2 Linear regression0
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Chapter 2: Section 3 Index numbers0
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Chapter 2: Section 4 Extrapolation and interpolation0
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Chapter 2: Section 5 Uncertainties in forecasting0
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Chapter 2: Section 6 Techniques for dealing with uncertainty0
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Chapter 3 Budgetary Control Systems: Section 1 Budgetary Control Systems3
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Chapter 3: Section 2 Sources Of Data10
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Chapter 3: Section 3 Co-ordination Of The Setting Of Budgets0
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Chapter 3: Section 4 Motivation0
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Chapter 3: Section 5 Methods Of Budgeting0
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Chapter 3: Section 6 Product Life Cycle0
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Chapter 3: Section 7 External Factots Affecting Cost Forecasts0
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Chapter 4 Preparing Operating Budgets: Intro And Section 1 Preparing Sales And Resource Budgets0
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Chapter 4: Section 2 Production Budget0
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Chapter 4: Section 3 Materials Usage Budget0
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Chapter 4: Section 4 Materials Purchases Budget0
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Chapter 4: Section 5 Labour Usage (hours) Budget0
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Chapter 4: Section 6 Labour Cost Budget0
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Chapter 4: Section 7 Overheads Budget0
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Chapter 4: Section 8 Plant Utilisation Budget0
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Chapter 4: Section 9 Preparing A Budgeted Operating Statement0
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Chapter 4: Section 10 Capital Budgets0
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Chapter 4: Section 11 Control Periods Within A Budget0
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Chapter 4: Section 12 Planning And Agreeing Draft Budgets0
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Chapter 4: Section 13 Fixed And Flexed Budgets0
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Chapter 4: Section 14 Uncertainty In The Budget Setting Process0
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Chapter 5 Preparing Cash Budgets: Intro And Section 1 Cash Budgets0
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Chapter 5: Section 2 Forecasting Cash Receipts And Cash Payments0
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Chapter 5: Section 3 Non-current Assets And Cash Receipts Or Payments0
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Chapter 6 Standard Costing: Intro And Section 1 Standard Cost Card1
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Chapter 6: Section 2 Setting Standard Costs0
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Chapter 7 Budgetary Control - Comparing Budget And Actual Costs: Intro And Section 1 Budgetary Control0
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Chapter 7: Section 2 Feedback And Feedforward Control0
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Chapter 7: Section 3 Variance Analysis0
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Chapter 7: Section 4 Variable Cost Variances0
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Chapter 7: Section 5 Fixed Overhead Variances (under Absorption Costing)0
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Chapter 7: Section 6 Fixed Overheads Variances Under Marginal Costing0
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Chapter 7: Section 7 Sales Variances0
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Chapter 8 Interpretation Of Variances: Intro And Section 1 Causes Of Variances0
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Chapter 8: Section 2 Controllable And Uncontrollable Variances0
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Chapter 9 Activity-based Costing: Intro0
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Chapter 9: Section 1 Calculation Of Costs Per Unit Under ABC0
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Chapter 9: Section 2 Advantages And Disadvantages Of ABC0
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Chapter 9: Section 3 When ABC should Be Used0
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Chapter 10 Cost Management: Intro And Section 1 Product Life Cycle0
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Chapter 10: Section 2 Target Costing0
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Chapter 10: Section 3 Technology And Operational Control0
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Chapter 11 Short-term Decision-making Techniques: Intro And Section 1 Short-term Decision Making Vs Long-term Decision Making0
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Chapter 11: Section 2 Relevant Costs0
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Chapter 11: Section 3 Shutdown Decisions0
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Chapter 11: Section 4 Key Factor Analysis0
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Chapter 11: Section 5 More Than One Constraint - Graphical Linear Programming0
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Chapter 12 Long-term decision-making techniques: Intro and Section 1 Payback Period (PP)0
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Chapter 12: Section 2 Net Present Value (NPV)0
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Chapter 12: Section 3 Internal rate of return (IRR)0
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Chapter 12: Section 3 Internal rate of return (IRR)0
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Chapter 12: Section 4 Accounting rate of return (ARR)0
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Chapter 12: Section 5 Comparing techniques0
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Chapter 13 Performance indicators: Intro and Section 1 Financial Performance Indicators8
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Chapter 13: Section 2 Limitations of financial performance indicator0
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Chapter 13: Section 3 Behavioural aspects0
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Chapter 13: Section 4 Non-financial performance indicators0
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Chapter 13: Section 5 Quality0
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Chapter 13: Section 6 Productivity and efficiency0
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Chapter 13: Section 7 The balanced scorecard0
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Chapter 13: Section 8 Ethical implications of target setting0
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Chapter 14 Divisional Performance: Intro and Section 1: Responsibility accounting11
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Chapter 14: Section 2 Controllable v uncontrollable costs4
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Chapter 14: Section 3 Investment centres13
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Chapter 14: Section 4 Transfer pricing2
