lOMoARcPSD|25448604
Variabl
e Cost
Behabiour-
wise
Classificatio
n of cost
Semi-
Fixed
variabl
Cost
e Cost
• Variable costs are those costs which vary with the levels of activity in the same direction
and more or less, in the same proportion. For example, direct material cost, salesmen
commission, etc.
• Semi-variable costs are partly variable and partly fixed costs. For example, telephone
charge, salesmen remuneration based on monthly salary plus commission, etc.
• Fixed costs, on the other hand, represent the costs which, in aggregate, tend to be unaffected
by the changes in the levels of activity. They remain constant irrespective of the levels of
activity (of course, within the relevant range). But they go on accumulating as the time
passes. For example, factory rent, salary of manager, factory insurance, etc.
E) Controllability: On the basis of whether the costs are controllable by a specified level of
managerial authority and during a specified period of time, costs can be classified into two
broad categories as controllable costs and uncontrollable costs.
Classificatio
n of cost
based on
Controllabili
ty
Controllabl Uncontrol
e Cost lable Cost
Cost Accounting
Jerlin Jose, Asst. Professor, CHRIST (Deemed to be University)
Bengaluru
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, lOMoARcPSD|25448604
• Controllable cost has been defined by CIMA, London as a cost which can be
influenced by the action of a specified member of an undertaking.
• On the other hand, uncontrollable cost has been defined by CIMA, England as a cost
which cannot be influenced by the action of a specified member of an undertaking.
Items of variable costs are controllable costs and most of the items of fixed costs are
uncontrollable costs.
F) Normality: Costs can also be classified into normal and abnormal costs.
Classification
of cost based
on Normality
Normal Abnorm
Cost al Cost
• Normal cost has been defined by CIMA, London as a cost at given level of output in
the condition in which that level of output is normally attained. It, therefore, forms a
part of costs of production and/or sales.
• On the other hand, abnormal costs represent the costs which are not normally incurred
at a given level of activity(i.e., production and/or sales) in the conditions in which that
level of activity is normally attained. It is, therefore, excluded from cost of production
and/or sales. Normally, these abnormal costs are charged directly to the Costing Profit
and Loss Account.
G) Relevancy: On the basis of whether the cost items are relevant or irrelevant to the decisions
under the consideration of the management, costs may broadly be classified into two
categories as relevant costs or irrelevant costs.
Cost Accounting
Jerlin Jose, Asst. Professor, CHRIST (Deemed to be University)
Bengaluru
Downloaded by Nikee Patel ()
Variabl
e Cost
Behabiour-
wise
Classificatio
n of cost
Semi-
Fixed
variabl
Cost
e Cost
• Variable costs are those costs which vary with the levels of activity in the same direction
and more or less, in the same proportion. For example, direct material cost, salesmen
commission, etc.
• Semi-variable costs are partly variable and partly fixed costs. For example, telephone
charge, salesmen remuneration based on monthly salary plus commission, etc.
• Fixed costs, on the other hand, represent the costs which, in aggregate, tend to be unaffected
by the changes in the levels of activity. They remain constant irrespective of the levels of
activity (of course, within the relevant range). But they go on accumulating as the time
passes. For example, factory rent, salary of manager, factory insurance, etc.
E) Controllability: On the basis of whether the costs are controllable by a specified level of
managerial authority and during a specified period of time, costs can be classified into two
broad categories as controllable costs and uncontrollable costs.
Classificatio
n of cost
based on
Controllabili
ty
Controllabl Uncontrol
e Cost lable Cost
Cost Accounting
Jerlin Jose, Asst. Professor, CHRIST (Deemed to be University)
Bengaluru
Downloaded by Nikee Patel ()
, lOMoARcPSD|25448604
• Controllable cost has been defined by CIMA, London as a cost which can be
influenced by the action of a specified member of an undertaking.
• On the other hand, uncontrollable cost has been defined by CIMA, England as a cost
which cannot be influenced by the action of a specified member of an undertaking.
Items of variable costs are controllable costs and most of the items of fixed costs are
uncontrollable costs.
F) Normality: Costs can also be classified into normal and abnormal costs.
Classification
of cost based
on Normality
Normal Abnorm
Cost al Cost
• Normal cost has been defined by CIMA, London as a cost at given level of output in
the condition in which that level of output is normally attained. It, therefore, forms a
part of costs of production and/or sales.
• On the other hand, abnormal costs represent the costs which are not normally incurred
at a given level of activity(i.e., production and/or sales) in the conditions in which that
level of activity is normally attained. It is, therefore, excluded from cost of production
and/or sales. Normally, these abnormal costs are charged directly to the Costing Profit
and Loss Account.
G) Relevancy: On the basis of whether the cost items are relevant or irrelevant to the decisions
under the consideration of the management, costs may broadly be classified into two
categories as relevant costs or irrelevant costs.
Cost Accounting
Jerlin Jose, Asst. Professor, CHRIST (Deemed to be University)
Bengaluru
Downloaded by Nikee Patel ()
