Classifications of cost

[Explanations]

Learning objectives:

  • Explain the difference between direct and indirect costs.
  • Explain variable, fixed and semi-variable costs.
  • Explain the difference between product cost and period costs.
  • What are differential, opportunity and sunk costs?
  • Explain how idle time, overtime premium and fringe benefit costs are treated.
  • Explain and give examples of four types of quality costs.
  • What are the major techniques used to split a mixed or semivariable cost into its variable and fixed cost components?

Number of pages: 10;
Approximate time required: 3 – 3.5 hours

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