Cost Concepts and Classification Cost Concepts: Direct costs: Costs directly related to producing a good or service, such as raw materials, direct...
Cost Concepts and Classification
Cost Concepts:
Direct costs: Costs directly related to producing a good or service, such as raw materials, direct labor, and manufacturing expenses.
Indirect costs: Costs that cannot be traced directly to a specific product or service but are incurred during the production process, such as rent, insurance, and depreciation.
Opportunity costs: The value of the next best alternative that was not taken.
Cost of goods sold: The cost of materials and labor used in the production of goods that have been sold.
Cost of production: The total cost of producing a product or service.
Cost of service: The total cost of providing a service.
Classification:
Ex-factory cost: The total cost of producing a product, including direct and indirect costs.
Gate-to-gate cost: The total cost of producing a product, including direct, indirect, and transportation costs.
Internal production cost: The total cost of producing a product for a company's own use.
Cost of goods sold (COGS): The cost of products that have been sold.
Cost of services: The cost of services that have been provided to customers