BA 185

UNDERSTANDING & CLASSIFYING COSTS

A. Accountant’s Perspective
1. Capital expenditure v. Operating expenditures
2. Cost v. Expenses. Loss
3. Product cost v. Period cost
4. Direct cost v. Indirect cost

B. Manager’s Perspective
1. Relevant cost v. Irrelevant cost
2. Direct segment cost v. Indirect segment cost
3. Avoidable v. Unavoidable cost
4. Controllable v. Uncontrollable cost
5. Planned cost v. Actual cost
6. Budgeted cost v. Standard cost
7. Out-of-pocket cost v. Non-cash cost
8. Sunk cost v. Future cost

C. Economist’s Perspective
1. Explicit cost v. Implicit cost
2. Opportunity cost v. Imputed cost
3. Incremental cost v. Marginal cost
4. Variable cost v. Fixed cost

COST SENSITIVITY ANALYSIS – COSTS BEHAVIOR IN RELATION TO CHANGES IN THE LEVEL OF ACTIVITY
(PRODUCTIOB/SALES)
1. Variable costs
2. Fixed
3. Mixed costs

RELEVANT RANGE

LEARNING CURVE THEORY