DIFFERENT TYPES OF COST

Out Of Pocket Cost

The out of pocket often used to describe cost which have not been yet incurred and which may very among the alternative course of action out of pocket cost, therefore, are relevant in making decision.

Imputed Cost

Imputed costs are hypothetical cost representing the cost of a resource measured by its use value. An imputed cost is similar to an opportunity cost, except that an imputed cost may be arbitrary measure.

Relevant Cost

The cost that directly effects future business decision is called relevant cost

Irrelevant Cost

The cost that do not effect the future business decision are called irrelevant cost

Inventorial Cost

Total cost all type of inventory that include work in process inventory, finished good inventory, merchandise inventory is called inventorial cost.

Differential Cost And Increment Cost

Differential cost and increment cost are defined as the difference in total cost between two alternatives.

Example

The differential cost and incremental cost of increasing production from 1000 automobiles to1200 automobiles per week would be the additional costs of producing the additional 200 automobiles each week. In the reverse situation the decline in cost caused by reducing production from 1200 to 1000 automobiles per week would often be called differential cost or increment cost.

Expenses

Decreases in ownership claims arising from delivering goods or services or using up assets is called expenses