Tuesday, 2 May 2017

Classification of Costs to determine Production costs

Classification of Costs


Basic understanding the costs

To produce something whether it is goods or services then needs a calculated and known the magnitude of the cost or the need and the possibility of obtaining revenue which may be accepted. Every sacrifice costs always expected would bring bigger results than had been sacrificed in the foreseeable future.

Thus, an entrepreneur should be aware of how the magnitude of the sacrifice in the production process on the basis that can start counting the price basically every cost component for company. In this case, total costs can always be calculated and can be compared with the total enrollment may be obtained.

Speaking on the issue of costs is an issue that is quite extensive, therefore in them look two parties who are related to one another in the production process. When we pay attention to the costs that must be exited right to a process of production, then it can be split into two properties, that is, which is the cost for producers was received on behalf of that gives factors of production are concerned.

The case for the consumer, the cost to acquire the tools of satisfied his needs or income for those who provide the tools satisfied those needs. The cost (cost) is the amount that is measured in units of money, i.e. a number of expenditure-expenditure in the form of constant or in the form of the transfer of wealth to gain something by the process the expenditure of capital stock, or services included or obligations incurred, in relation to the goods or services procured or to be procured during the coming. 

From the definition and understanding of the costs above, then it can be said that it is a notion widely because of all that belongs to the elements significantly overall expenses including fixed costs into account and be record-keeping in the production process of the company, so that the costs during the production process is in its entirety ...

The notion of cost (cost) and cost (expense), in the following cost is costs are considered will provide benefits or service potential in time will come and therefore constitutes the assets included in the balance sheet. Rather expense cost is a cost that has been used to make accomplishment. Because of this cost can not give right merits again coming on, then the place is on the income estimates.

The classification of Costs

The main companies in financial management in the production process would of course require a fee, due to the cost accounting aims to present cost information is needed so that they can manage the management company or its part in effective in taking down and subsume the costs must always be noticed for what purpose requires management of information costs. We recommend that you always used the concept of "different cost for different purposes". 

Classification costs there are certainly the concept of costs that can meet a wide variety of purposes. Therefore in cost accounting there are a variety of ways its costs as follows:

  1. Cost Classification on the basis of object of expenditure
  2. The cost Classification on the basis of principal functions within the company.
  3. Assignment costs over relationship costs with the goal of something that is financed.
  4. A cost Classification on the basis of the relationship of costs by something that is financed.
  5. The cost Classification on the basis of time.

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