4 Various Measures Of Cost

Tabular array of Contents

Unlike types of Costs in Toll Accounting
- 1. Historical Cost
- two. Future Cost
- 3. Replacement Cost
- 4. Standard Cost
- 5. Estimated Toll
- six. Product Price
- 7. Production Cost
- 8. Direct Toll
- nine. Prime Price
- ten. Indirect Cost
- 11. Fixed price
- 12. Variable Toll
- xiii. Opportunity Cost
- xiv. Imputed Cost
- 15. Programmed Cost
- 16. Controllable Price
- 17. Non-Controllable Cost
- 18. Joint Price
- xix. Sunk Toll
- 20. Postponable Cost
- 21. Out of Pocket Cost
- 22. Differential Cost
- 23. Conversion Cost
- 24. Capacity Price
- 25. Standby Price
- 26. Enabling Cost
- 27. Committed Toll
- 28. Avoidable Cost
- 29. Decision Driven Toll
- 30. Marginal Toll
- 31. Quality Related Costs
- 32. Prevention Cost
- 33. Appraisal Cost
- 34. Internal Failure Toll
- 35. Relevant Costs
- 36. Social Responsibility Cost
- 37. Target Cost
- 38. Inventorial Toll
- 39. Deferred Toll
- 40. Expense
- 41. Loss

Different types of Costs in Price Bookkeeping

One tin empathise the cost bookkeeping properly only after knowing various types of toll. Hence, the agreement of types of cost enables proper application of cost accounting principles. Therefore, certain types of cost are briefly explained below.

Types of Costs

Types of Costs

1. Historical Price

Information technology is the post mortem of cost, which is already incurred. This blazon of cost reports the past events. If the time lag betwixt the toll incurred time and reporting time is very short, quality conclusion may exist taken. If not so, these costs are irrelevant for decision-making.

ii. Future Cost

These types of costs are expected and incurred in the days to come.

3. Replacement Toll

Replacement cost is the cost required to replaced any existing nugget now.

4. Standard Cost

Standard cost is a scientifically predetermined cost, which is arrived at assuming a specific level of efficiency in material utilization, labor and indirect expenses.

5. Estimated Price

Estimated toll is an cess of what will exist the cost approximately. Information technology is based on the by experience and adjusted co-ordinate to the expected future changes.

half dozen. Product Cost

Product toll is the price of a finished production.

7. Production Price

Production cost is the combination of both prime cost and absorbed production overhead.

8. Direct Cost

Directly toll is a cost, which can be easily identified with a specific saleable cost unit.

nine. Prime Cost

Prime cost is the aggregation of direct fabric price and direct labor price. The term direct refers to elements of costs, which are hands traceable to a item unit of output.

10. Indirect Toll

Indirect Cost is the cost, which cannot be hands or direct identified to the unit of measurement of output or to the segment of a concern operation.

eleven. Fixed toll

Fixed cost is otherwise called fixed overhead and period cost. A cost, which is incurred for a specific period and does not get affected past fluctuations in the levels of action (output or turnover). For example Rent, Salaries and the like.

12. Variable Toll

Variable toll is the toll, which is varying or fluctuating according to the levels of activity (output or turnover) in directly proportion.

13. Opportunity Toll

Opportunity is the value of a benefit sacrificed in favor of an alternative class of action.

14. Imputed Cost

Imputed cost is otherwise called Notional Cost and Hypothetical Toll. A cost that has not involve cash outflow from the business concern organization. It does not appear in the financial records just relevant to the controlling.

For example: Interest on Capital. CIMA defines notional cost every bit,

the value of a benefit where no bodily cost is incurred.

fifteen. Programmed Cost

A cost which is incurred under any specific program of an organization is called programmed cost. This is reflecting top direction policies and decisions.

16. Controllable Toll

Controllable cost is the cost, which can be influenced past budget holder. In other words, a cost may be controllable by managerial supervision.

17. Non-Controllable Price

Non-controllable cost is the price that cannot be hands controllable at any level of managerial supervision.

18. Joint Toll

Articulation cost is the cost of a process, which results in producing more than one principal product.

19. Sunk Cost

CIMA defines sunk cost equally,

the by cost is not taken into accounts in conclusion making.

20. Postponable Toll

A cost can be shifted to future with picayune or no effect on the efficiency of electric current operations is postponable cost.

21. Out of Pocket Cost

Out of pocket cost is the price which results in cash outflow from the concern due to a particular managerial determination.

22. Differential Cost

Differential price is the departure of toll between the full costs of two alternatives that are calculated to assist decision-making.

23. Conversion Cost

Conversion toll is also called production cost. Direct material cost is not included in the production toll. It is the cost incurred for converting the raw material into finished production. In other words, it is the combination of direct labor, directly expenses and factory overhead.

24. Chapters Toll

Capacity cost is an alternative term used for fixed toll. It is the toll of providing facilities through a system for a detail menstruation. The chapters cost is classified into two categories. They are Standby Cost and Enabling Cost.

25. Standby Price

Standby cost is the price that is to be incurred continuously even though the operations or facilities are shutdown temporarily. For example, Depreciation.

26. Enabling Cost

Enabling cost is the toll that is non to exist incurred if the operations or facilities are shutdown temporarily.

27. Committed Toll

Committed cost is a fixed cost of the company resulted from the before decision of the direction. For case: Insurance Premium. The amount of insurance premium cannot be controlled at present on a short run basis.

28. Avoidable Cost

Avoidable cost is the specific price of an activity or a sector of a business organization that can be avoided if that activity or sector is not in functioning.

29. Decision Driven Price

Decision Driven toll is the cost incurred by the visitor due to its policy determination up to the stage of altering such decision. It does not vary with changes in the level of output or operational activities.

30. Marginal Cost

Information technology is the cost of ane more unit of product or service, which can be avoided if that unit is non produced or provided.

These are the costs incurred for ensuring and assuring quality as well equally the loss incurred fifty-fifty though the quality is not achieved. Quality related costs are classified as prevention cost, appraisal toll, internal failure cost and external failure cost.

32. Prevention Toll

Prevention toll is the cost incurred to reduce the appraisal cost to a minimum.

33. Appraisal Cost

Appraisal price is the cost incurred initially for ascertaining conformance of quality of production according to the requirements. For example: Inspection and testing cost.

34. Internal Failure Cost

A cost is arising from inadequate quality discovered before the transfer of ownership from supplier to purchaser.

35. Relevant Costs

CIMA defines relevant costs

costs advisable to a specific management conclusion.

CIMA defines social responsibleness toll equally

tangible and intangible costs and losses sustained by tertiary parties or the full general public as a result of economic activity.

37. Target Cost

CIMA defines target cost as,

a product cost guess derived from a competitive market cost. Used to reduce costs through continuous comeback and replacement of technologies and processor

38. Inventorial Cost

Information technology is the toll incurred for manufacturing a product and considered as avails under generally accepted accounting principles. For example: Research and Development cost. The inventorial cost becomes expenses when the products are sold.

39. Deferred Cost

The Visitor does not receive an economic benefit of a cost during the bookkeeping flow in which the cost is incurred. Such toll is termed as deferred cost. For example: Prepaid Insurance. Information technology is otherwise called as unexpired expenses or unexpired cost and treated as an nugget.

40. Expense

It is an expired cost and the company has received its economical do good. Moreover, the economic do good is more than than the expired cost. For example: Rent paid for the accounting period.

41. Loss

Information technology is also an expired price and the company has received its economic benefit. But, the received economic benefit is less than the expired price.