Chapter 2

Managerial Accounting and

Cost Concepts

Group 5
Nishat Tarannum (ID: 25-171)
Tanzila Zahan (ID: 25-067)
Ayesha Antara (ID: 25-139)
Md. Monjurul Haq (ID: 25-053)
Ahmed Tanvir Rifat (ID: 25-169)

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Cost Classification
Allotting costs to cost objects

2 Types: Direct Cost & Indirect Cost

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Direct Cost Vs Indirect Cost

3
Direct Cost vs Indirect Cost

Examples

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Cost Classification
Manufacturing Comapnies

1 2

Manufacturing Cost Non-manufacturing Cost

Direct material, direct labor, manufacturing Selling cost, administrative cost.
overhead.

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Manufacturing Cost

Direct Material Direct Labor Manufacturing Overhead

Essential part of final Easily tracable labor cost of All manufacturing cost except for
product. each unit produced. direct labor and direct material.

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Non-manufacturing Cost

Selling Cost Administrative Cost

Costs associated with Not directly tied to a specific core function
distributing, marketing and such as manufacturing, production, or
selling a product or service. sales.

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Cost Classification
For Financial Statement • Product Cost
• Period Cost
• Prime Cost
• Conversion Cost

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Elements of Cost Behavior

10
Cost Behavior with a Scatter Graph

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Traditional Format Vs Contribution Format

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Factors of Decision Making
• Differential cost: Difference of cost between alternatives
• Differential revenue: Difference of revenue between alternatives
• Sunk Cost: Money that has already been spent and cannot be recovered
• Opportunity cost: Represent the potential benefits that an individual, investor, or
business misses out on when choosing one alternative over another.

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Thank you!

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