To explain about cost we start from the meaning of cost. According to Institute of Cost and management Accounts (ICMA) London in 1982, “the amount of expenditure (actual or national) incurred on, or attributable to a specified thing or activity.” According to the definition it is clear that cost may be the actual expenditure of national chares.
After the definition of cost we will go with the classification of costs:
1. Nature or Elements
2. Functions or Operations
3. Traceability
4. Variability or Behaviour
5. Controllability
6. Normality
7. Managerial Purposes
Now, we will explain about the costs along with graphs:
Fixed Cost graph:
Total Fixed Costs:
Unit Fixed Costs
Variable Costs known as also Linear Variable Costs. Variable costs graph shown as:
Linear Variable Cost
Non-Linear or Curvilinear Variable Costs graph:
Convex – linear Variable Cost
Concave – Linear Variable Cost
Semi-Fixed and Semi-Variable Costs
Semi-fixed Cost
Semi-variable Costs
Now, in the end of the chapter we can say all the things are clear which are in the chapter of costs. Most things are clear with the graph of costs. With the help of above mentioned graph we can conclude some decision in an organization. Cost is a part of CFS also in the financial chapter.
