Editing Cost accounting (section)

==Classification of costs==
Important classifications of costs include:
# By nature or traceability: Direct costs and [[indirect costs]]. Direct costs are directly attributable/traceable to [[cost object]]s, while indirect costs (not being directly attributable) are allocated or apportioned to cost objects.
# By function: production, administration, selling and distribution, or research and development.
# By behavior: fixed, variable, or semi-variable. Fixed costs remain unchanged irrespective of changes in the production volume over a given period of time. Variable costs change according to the volume of production. Semi-variable costs are partly fixed and partly variable.
# By controllability: Controllable costs are those which can be controlled or influenced by conscious management action. Uncontrollable costs cannot be controlled or influenced by conscious management action.
# By normality: normal costs and abnormal costs. Normal costs arise during routine day-to-day business operations. Abnormal costs arise because of any abnormal activity or event not part of routine business operations, such as accidents or natural disasters.
# By time: [[Historical costs]] and predetermined costs. Historical costs are costs incurred in the past. Predetermined costs are computed in advance on basis of factors affecting cost elements.
# By decision-making costs: These costs are used for managerial decision making: 
##[[Marginal costs]]: The marginal cost is the change in the total cost caused by increasing or decreasing output by one unit.
##Differential costs: This cost is the difference in total cost resulting from selecting one alternative over another.
##[[Opportunity cost]]s: The value of a benefit sacrificed in favour of an alternative course of action.
##Relevant cost: The relevant cost is a cost which is relevant in various decisions of management.
##Replacement cost: This cost is the cost at which existing items of material or fixed assets can be replaced at present or at a future date.
##Shutdown cost: Costs incurred if operations are shut down, and which would not occur if operations are continued.
##Capacity cost: The cost incurred by a company for providing production, administration and selling and distribution capabilities in order to perform various functions. These costs are normally fixed costs.
##Sunk cost: A cost already incurred, which cannot be recovered.
##Other costs