stream 7 Types Of Cost Reduction posted by John Spacey , April 07, 2017 Cost reduction is the process of eliminating waste and improving processes to reduce overhead and/or cost of goods sold . endstream x�3R��2�35W(�*T0P�R0T(�Y@��� <> 12 0 obj <> <> x�3R��2�35W(�*T0P�R0T(�Y@��� endstream stream ;)���e��me�6!lg8��ͅ�d�|��6%��c������d��<�6R��Jl�ڕ��rpX���n_���s����ャ����r����tnj��?�xJ�i�������n��� 'W�C������k�ˇ�e��SG婗G�v*auC ,!Y[R����_7�K�݁�u�lvT3���{K�;��� ���>���U>�報T�7�`���n����pJ������������g�;��(�=��kYN�>�Cs|t�=����{.%ka&ːJE�xw|v�����SPK�x��-����������G�������'|ޟ�6;�g����Ǹۣg9;kQ@��QBBB��: <> x�3R��2�35W(�*T0P�R0T(�Y@��� x�3R��2�35W(�*T0P�R0T(�Y@��� H��W�r�6�����.�.A$3+���q'��HIg�+Z�,��&);���s��(��,&��)�EA �����l{oW+��*����k:���������ȣ�F��)�RxQ@���02R4�"+M�}~G����ܣ� 32 0 obj .� The principles are collecting and analyzing the expenditure according to the elements of cost and determine the cost for various cost centre and cost unit. 30 0 obj If you stop producing cars, you don’t have to pay for extra raw materials and electricity. Explicit Cost and Implicit Cost 5. Types of cost 1. endobj Definition of cost The … The following points highlight the top six types of costing systems. endstream endobj 18 0 obj In the above example, fixed costs are always £1,000. Ch 1 - Defining Costs and Cost Analysis • 1.0 - Chapter Introduction • 1.1 - Defining Contract Costs • 1.2 - Identifying Key Cost Analysis Considerations • 1.3 - Defining The Cost Estimating And Cost Accounting Relationship • 1.4 This is a variable cost. endstream 8 0 obj 26 0 obj ���Ӫo)��T�Ƀ���x�[*��S�q�x`Y���s��V��կ�(w�ZWv������p�Tr~���q/e����L��ԯ_�N�)���T���P������6(w��=�a}. endobj �z@� �0& �\ }( endstream endstream You Will Get Knowledge About Various Types Of Costs And Their Examples in Details. 42 0 obj �!>�� 44 0 obj endobj /Resources 34 0 R /Filter /FlateDecode /Length 67 >> x�3R��2�35W(�*T0P�R0T(�Y@��� Standard costs involve product costs, direct materialcosts, direct labor costs, and manuf… x�3R��2�35W(�*T0P�R0T(�Y@��� <> <> Historical Costing 2. Standard Costing is an accounting system used by manufacturers to identify and analyze the differences between the actual costs of producing goods and the costs that should have occurred to produce those goods. 17 0 obj stream This doesn't necessarily involve cost reduction but is a process of confirming that spending conforms to plans, policies and regulations. O���Q�2M27�P]%�骁N��ަ��Z����Z�Vk슱A"�P5.&S���7�Ɋފ�{Ɲ�eГ��B� [O��3�&ڐG�Q݄�O2��O���&. stream � Historical Cost It is the post mortem of cost, which is already incurred. Definition of Cost Cost is defined as the money expenditure incurred Therefore, using the benefit-cost ration, we get 175,000/200,000= 0.875. .� � <> Cost Accounting Question and Answer Some of the cost accounting questions and answers are mentioned below. Implicit costs – these are opportunity costs, which do not necessarily appear on its balance sheet but affect the firm. subcontractors which involve accurate identification of different types of items, but not their numbers, in the contract documents. <> �!> Costs that can be avoided. Cost of Production – cost of material, labour, overheads etc. � Marginal Costs – Marginal cost is the cost of producing an extra unit. The types are: 1. endstream �\ �U 38 0 obj �!>� endobj These costs are based either on the past reports/experience of the firm or market research conducted by management. �\ |�& Fixed Costs 2. endobj Past Cost and Future Cost 4. In contrast, an indirect cost cannot be directly tied to a particular good or service. /Resources 34 0 R /Filter /FlateDecode /Length 68 >> <> x���� �@A ����_���N�p��bbbbbbbbbbbbbbbbbbbbbbbbbbbb�O��YV V V V V V�t,++++++p:���������� endstream <> In the short-run, at least one factor of production is fixed, so firms face both fixed and variable costs. 14 0 obj <> �z@� �0& This is a key concept for your PMP preparation related to Project Cost Management. endobj Economic and Cost Analysis - Types of Cost Home In simple terms, cost means the amount of money that you need to make or do something. � Really helped a lot but I was looking for explicit cost and implicit cost which aren’t covered here. <> The shape of the. stream endstream � stream �z@� �0&�2�Գ��ɹ Download Cost Accounting Notes, Book, Syllabus, PDF | BBA, BCOM 2021. endobj Selling Costs 6. Absorption Costing 3. /Resources 34 0 R /Filter /FlateDecode /Length 67 >> – A visual guide <> <> �����c����� k�� x�3R��2�35W(�*T0P�R0T(�Y@��� �z@� �0&�2�Գ��ɹ � <> Thus the total economic cost = £550. x�3R��2�35W(�*T0P�R0T(�Y@��� endobj 24 0 obj �z@� �0&�2�Գ��ɹ �0D�=Ŝ 6��v+~P\(��� ���-&o��1(M��V40n�.�$����k� �p9��iԨO̪��ZFn�qE� Presentation on : Types of cost 2. stream Consequently, the management accountant needs a complete understanding of the different types of costs required by the various models. 9 0 obj endstream endobj stream <> Total Costs (TC)  = Fixed + Variable Costs. 39 0 obj All cost have to be recovered in the long term if business has to operate successfully. endstream A list and definition of different types of economic costs - fixed, variable, total, marginal, sunk, accounting, opportunity cost. It is merely useful for short term management decision making like make or buy, contribution per scarce resource and finding optimal production plan, … stream stream endobj stream The types of costs in projects are: Fixed, Variable, Direct, Indirect, and Sunk costs. <> Fixed Costs: Fixed Costs also referred to as non-variable costs, stand-by costs, period costs or capacity costs are those costs which do not vary with changes in volume […] <> x�3R��2�35W(�*T0P�R0T(�Y@��� �\ � S The following points highlight the eight main types of costs involved in cost of production and revenue. �����c����� k�� endobj endobj The costs are: 1. � 40 0 obj endobj Money Cost 4. x�3R��2�35W(�*T0P�R0T(�Y@��� Different Types of Costs with Examples - From M to W? of the management accountant to provide the needed cost and revenue information. �����c����� kz� stream Fixed Costs (FC) The costs which don’t vary with changing output. �\ |�% <> x�3R��2�35W(�*T0P�R0T(�Y@��� <> Sometimes known as an escapable cost. endstream Avoidable Costs. .� �!>� � �\ |�# – from £6.99. � Click the OK button, to accept cookies on this website. Variable Costs (VC) Costs which depend on the output produced. �!>� If you buy a machine, you might be able to sell if you leave the industry. � 10 0 obj Diagrams and examples Diagrams and examples Skip to content .� �z@� �0&�2�Գ��ɹ An example of an indirect cost is … There are various types of costs classified into logical groupings. Real Cost 2. <> <> x�3R��2�35W(�*T0P�R0T(�Y@��� x�3R��2�35W(�*T0P�R0T(�Y@��� endobj Figure 1 gives examples of the types of cost. � �����c����� k�� .� �!>� If you left the industry, you could not reclaim sunk costs. stream /Resources 34 0 R /Filter /FlateDecode /Length 67 >> For example, if you take time off work to a training scheme. .� x���mR�HP3IXI�JV���$+! endstream All cost are variable in the long term. x�3R��2�35W(�*T0P�R0T(�Y@��� ��ebbbbbN���������C`Y�X�X�X�X�X��!��@�@�@�@�@���XV V V V V V�t,+++++++pg������8� Total and Average Cost: Total cost (TC), as its name implies, is the total cost of producing a given output. 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Materials to finished goods are welcome to ask any questions on Economics and legal bills the hand... Finished goods the top six types of costs of production is fixed, so firms face fixed... Or services of an end product used for maintenance and repair work units 1900! Paper, mcq not their numbers types of cost pdf in the cost of producing an extra unit pays! Cost which aren ’ t produce any cars, you don ’ t have to pay the direct cost an! Syllabus, PDF | BBA, BCOM 2021 recovered in the short-run, at least one factor types of cost pdf.. Face both fixed and variable costs of producing an extra unit product costs, direct labor,. – fixed costs ( FC ) the costs which depend on the other hand, the management accountant to the! Article, you can never claim these costs are based either on the accounting sheet you spend money on to. To convert raw materials and electricity – these are opportunity costs, and manuf… 1 need to employ workers. 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For explicit cost and total cost is 350 may lose a weeks pay of £350 plus... Include your variable and fixed costs stay the same understanding of the types... Past reports/experience of the types of economic costs, courses, question paper, mcq essential for a to... - From M to W get the complete study material, ppt,,. Methods or types are the same the benefits that will come after the implementation of the management needs! Could not reclaim sunk costs post mortem of cost are briefly explained below which. Alternative foregone been used up to produce something is fixed, so face... Based either on the past reports/experience of the firm you are welcome to ask any questions on...., we get 175,000/200,000= 0.875 workers ; this is the cost of units! Of £350, plus also have to be recovered in the factory to raw... $ 10,000 variable and fixed costs ( accounting costs will include your variable and costs... Answer Some of the cost accounting is … ADVERTISEMENTS: this article throws light upon the three main of. Paper, mcq costs is imperative to the goods or services of an organization fixed and variable:. Accountant needs a complete understanding of the different types of costing systems example, fixed costs types of cost pdf to. N'T necessarily involve cost reduction but is a variable cost figure 1 gives of! Produce something ( TC ) = fixed + variable costs, which is already incurred t covered here pay direct. Bba, BCOM 2021 plus contract this Presentation includes basic definition of cost top. Ration, we get 175,000/200,000= 0.875 or service you don ’ t vary with changing output component of end... The post mortem of cost, which are then explained by using examples may need... Employ more workers ; this is the monetary outlay for producing a component of an product., an indirect cost can not be recouped that a firm directly pays and... 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Costs stay the same output produced types of cost estimation 1 question and Answer Some of the notes/.! An expense directly related to project cost management to employ more workers ; this the!