Cost classification in accounts

Cost classifications (1).
 Direct costs:
o Costs that can be specifically and exclusively identified w
particular activity or cost object.
 Indirect costs (overheads):
o Costs that cannot be specifically and exclusively identified
particular activity or cost object.
 Prime costs:
o Is the sum of all direct manufacturing costs.
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,Activity 1.
 Given below are input in the production of cup cakes.
 Cost of flour K100
 Cost of sugar K50
 Cost of baking powder K30
 Energy cost K50
 Supervision cost K40
 Labour cost K20
 Required:
 Determine the prime cost and the total cost of production
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, Cost classifications (2).
 Fixed costs:
o Costs that remain constant for a specific period of time (short
and are not affected by the volume of activity.
 Variable costs:
o Costs that vary in proportion with the volume of activity.
 Semi-fixed (semi-variable)costs:
o Costs that are partly fixed and partly variable.

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