OTHER COSTS

Expenses

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

Losses

Reduction in the value of property due to physical damage or destruction.

Example

During manufacturing 200 units lost due to some reasons is called loss.

Opportunity Cost

An opportunity cost is the benefit which could have been obtained by following another course of action.

Fixed Cost

Fixed costs are those cost, which do not change significantly in response to change in an activity base.

Example

Fixed cost can also included administrative and executive salaries property taxes leases and many types of insurance.

Variable Cost

A variable cost is one that arises or fall in direct proportion to change in the activity base.

Example

If the activity base increases by 10% the variable cost automatically increases by 10%.

Avoidable Cost

Cost that will not continue if an on going operation is changed or deleted are relevant.

Example

Avoidable cost includes department salaries and other costs that could be eliminated by not operating the specific department.

UNAVOIDABLE COST

Cost that continue even if an operation is deleted or changed are not relevant in our example because they are not effected by a decision to delete the department unavoidable cost include many common cost which are these cost of facilities $ services that are shared by user.

EXAMPLE

Store depreciation, heating, air conditioning and general management expenses are cost of resource used by all departments.

PRODUCTION COST

Production cost identify with goods produced or purchased for resale. This cost initially identifies as part of the inventory on hand these product cost become expenses only when the inventory is sold.

PERIOD COST

Period cost is cost that is deducted as expenses during the current period with out going through an inventory stage.

FULL COST

The total of all manufacturing cost plus the total of all selling and administrative cost are called full cost.