Tag: Cost classifications

Cost behaviour is the study of how different costs change in response to changes in the level of activity or output.

It refers to the way and manner in which different costs change as the level of production changes.

Cost behaviour shows the relationship between a cost and the level of economic activity.

There are four main cost behaviour patterns, which are fixed costs, variable costs, semi-variable costs, and step fixed costs.

While direct costs are those costs that can be economically traced and attributed directly to a specific cost unit or cost centre, indirect costs are those that cannot be traced and distributed directly to a specific cost centre.

Cost classification is the process of grouping costs according to common characteristics.

It is a method of organizing costs based on specific characteristics.