Undoubtedly, the most tragic and devastating of the losses caused by the war was the loss of life. the term costs how costs vary with the quantity of output a firm produces. This is sum total of various business expenses of Giga such as Cost of Raw Material, Salaries and Wages Overhead Expenses and Selling and Distribution Expenses. The cost can be differentiated by its nature or the purpose for which it has occurred. • Costs can be simply defined as the money or resources associated with a purchase / business transaction or any other activity. Cost Plus Fixed Fee (CPFF) contracts . 1. CONCLUSION The main objective of cost control is to minimize and reduce the project costs. capacity Q can be readily computed. Getting started with Logical Reasoning. Cost analysis is all about the study of the behavior of cost with respect to various production criteria like the scale of operations, prices of the factors of production, size of output, etc. On the other hand book costs such as depreciation, do not require current cash payments. Sunk costs on the other-hand will remain the same irrespective of the alternatives selected. Actual Cost and Opportunity Cost 3. The accuracy they provide small and large organizations with the monitoring of inventory, products produced, products sold and reporting features, … Inferential data analysis is amongst the types of analysis in research that helps to test theories of different subjects based on the sample taken from the group of subjects. Share Your PDF File At the same time, the mankind is trying to re-establish the connection it once had with nature. Contents:Purpose of Construction Cost EstimationOwner’s Purpose of Cost EstimationContractor‘s Purpose of Cost EstimateEngineer‘s Purpose of This list of the types of expenses your business will have, or has, is called your cost structure. A Brief Note On Delays And Construction Delays 2043 Words | 9 Pages . Explicit Cost and Implicit Cost 5. The costs relevant for most managerial decisions are forecasts of future costs or comparative conjunctions concerning future situations. Thus, it need not be considered by the management in costs evaluating the alternatives as they are common to all of them. (v) The expansion into additional markets etc. Project summary is attached in the template. At Br Types of conclusions. Please enable Cookies and reload the page. Further additional expenses may have to be incurred when operations are re-started. Personal and Impersonal Cost Centres: A cost centre which consists of a person or group of persons is called ‘personal cost centre’. An increase in the volume means a proportionate increase in the total variable costs and a decrease in volume results in a proportionate decline in the total variable costs. Personnel Budget is one of the crucial types of the budget which covers the manpower budget for the specific period. Introduction to arguments. 3. Cost Plus Award Fee (CPAF) contracts. Types of conclusions. In a cost sheet, the following overheads or expenditure are presented systematically: Prime Cost. Past Cost and Future Cost 4. : The Role of Utilization Management.Washington, DC: The National Academies Press. SUMMARY AND CONCLUSIONS 11.1 Summary ! A good conclusion brings closure to a presentation and also seeks a lasting impact. Variable costs fluctuate as the level of production output changes, contrary to a fixed cost. In general, economist’s marginal cost is cost account cost. 5.7 Conclusion. But during the period of changing price levels historical costs may not be correct basis for projecting future costs. (ii) Changing the channel of distribution, (iv) Replacing a machine by a better one, and. Is one which is not affected or altered by a change in the level or nature of business activity. Cost control is necessary for all types of project disregarding its sizes. Traditional costing approaches can referred as the conventional method. Incremental Costs and Sunk Costs 6. The controllability of certain costs may be shared by two or more executives. Actual costs or historical costs are records of past costs. Nidia Garcia Professor: Kyusuk Chung HSCI 314 April 26, 2013 Cost Conundrum & Escape Fire Our Healthcare system is clearly business based according to the article “Cost Conundrum” and on the movie “Escape Fire”. They are constant per unit. From a health economics perspective, the following broad types of cost may be described: 1. Non-expenditure or Implicit Costs arise when factor units are owned by the employer himself. Privacy Policy3. Types of conclusions. In this article, you will learn about the types of costs associated in a project, which are then explained by using examples. “The total cost of production of any particular goods can be said to include expenditure or explicit costs and non-expenditure or implicit costs.” Expenditure or Outlay or Explicit Costs are those costs which are paid by the employer to the owners of the factor units which do not belong to the employer itself. The employer is not obligated to anyone in order to obtain these factors. Since it takes care of all the personnel, and efficient working of an organization depends on the payment of the employees, this is one of the important types of budget. 30,00, 000. Suggested Citation:"Conclusions and Recommendations. The world is quickly moving towards energy sustainability. Incurred Cost Conclusion; The notion of incurred cost is based on the principle prescribed for expense recognition under the accrual accounting concept. These costs become important when management is faced with the alternatives of either continuing the existing plant or suspending its operation or abandoning it altogether. Thus Social cost is Private Cost + External cost. (ii) Marginal Cost is the extra cost of producing one additional unit. The difference between cost accounting and financial accounting. Email. 8) Marketing Budget Is the additional cost due to change in the level or nature of business activity. Following is … A correct and … There is a linear relationship between volume and variable costs. These costs are in the nature of contractual payments and they consist of wages and salaries paid; payments for raw materials, interest on borrowed capital funds, rent on hired land and the taxes paid to the Government. The cost required to convert raw material into product is called as conversion cost. Expenditure costs are explicit; since they are paid to factors outside the firm while non-expenditure or implicit costs are imputed costs. Common costs that vary with the decision must be allocated to individual products. The costs incurred up to the Split off Point are common costs. TOS4. Type # 1. If there is any change in cost driver, the cost of product changes automatically. This includes the cost of damage to the environment caused by the activities of the firm. In some manufacturing enterprises two or more different products emerge from a single raw material. 2006. This type of cost varies depending on the number of products a company produces. Because the conclusion is the last part of the talk, it is often the part the audience remembers best. It is usually associated with the commitment of funds to specialised equipment or other facilities not readily adaptable to present or future e.g., brewing plant in times of prohibition. Fixed costs - costs that remain constant regardless of the level of activity. Direct costs: These relate to the use of resources as a direct result of the treatment and health care process. The difference between fixed and variable costs. They change in the same direction as volume but not in direct proportion there to. Short-run Costs and Long-run Costs and Others. If you are at an office or shared network, you can ask the network administrator to run a scan across the network looking for misconfigured or infected devices. An organization needs to bear multiple types of overheads while carrying out business operations. Doctors and litigation – penalty for type II errors. Introduction to arguments. What Types Of Cost Information Are Reported To Support Managerial Purposes And Decisions. Book costs can be converted into out of pocket costs by selling the assets and having them on hire. Social Cost refers to the cost of producing commodity to society in the form of resources that are used to produce it. The cost reimbursable contracts are of 3 types. It includes the cost of direct and indirect labour, overheads and expenses. Absorption Costing 3. Preliminary estimates are prepared with reference to the cost of similar type projects in a practical manner. It includes cost of raw materials used (direct materials), direct labor, and factory overhead.2. Long-run Costs are those which vary with output when all output factors including plant and equipment vary. The business enterprise depends upon future cost and not on Past Cost. Cite any sources you use in accordance with APA guidelines. If you are on a personal connection, like at home, you can run an anti-virus scan on your device to make sure it is not infected with malware. There is an inverse relationship between volume and fixed costs per unit. This chapter explains generic business-level strategies that executives select to keep their firms competitive. The incremental costs are relevant to the management in the analysis for decision-­making. Assume for this assignment that you are being highly considered for a director-level HR management position for a best-in-class national retailer. Identify the conclusion | quick guide . In this case this is = 30, 00, 000 + 20, 00, 000. In the above case, the Private Cost for 'Giga Dye and Chemicals Limited is Rs. The three types of cost of quality are Prevention costs, Appraisal costs and Failure. The following points highlight the top thirteen types of cost in cost concept analysis. "Institute of Medicine. Some of the types are: 1. Google Classroom Facebook Twitter. An estimate is a calculation of quantitiesof a different item of work and their expenses likely to incur during projectwork. Past Cost and Future Cost 4. Conversion Cost. Cost of any product depends upon cost drivers. The monthly salary of the General Manger when one of the divisions is a costing unit would be an indirect cost. Private cost refers to the cost of Production to an individual producer. The Cost of production of any unit of a commodity A’ is the value of the factors of production used in producing the unit. There are two types of costs in construction projects: direct and indirect costs. Other Types of Cost: Historical Cost – It refers to the actual cost of acquiring an asset or producing a product or service. A small part of a population is studied and the conclusions are extrapolated for the bigger chunk of the population. Rent would then replace depreciation and interest, while understanding expansion; book costs do not come into the picture until the assets are purchased. There may be different types of cost drivers such as number of units or types of products required to produce. For this reason, lump sum contracts are extremely common in construction. Some of the most common incurred costs include: Manufacturing Costs. The cost of loss to the environment caused by Giga is estimated to be Rs. Controlling these costs is imperative to the profitability of a project. They therefore do not disclose separate transaction costs. There are mainly four types of cost accounting: standard cost accounting, activity based accounting, lean accounting and marginal costing. 2. Type 5. 1. Energy efficiency is the wave of the future. These include money spent on advertising, conducting research, … One of the objectives of this study was to provide an explanation of the widely observed phenomenon of increasing returns to labor services or of increasing short-run returns to scale. Conclusion; Components of Cost. A cost structure is a high level model of the costs of an industry, organization, business model or business unit.This typically includes a high level categorization of costs, the proportional size of each category and a designation of fixed or variable cost.Cost structures are typically used to plan a business and to communicate the costs of a strategy or investment. Conclusion; Components of Cost. Disclaimer Copyright, Share Your Knowledge The assets are usually shown in the conventional financial accounts at their historical costs. These costs should not be identified with individual products if it is not meaningful and useful to identify them. The initial cost made for manufacturing a product, i.e., raw material, labour wages and other production-related expenses, is termed as prime cost. Variable Costs . Types of evidence. It basically includes a fixed cost potion plus additional variable costs. They are identifiable as separate products only at the conclusion of common processing generally known as the SPLIT OFF POINT. doi: 10.17226/1359. Labor hours, workers grade, costs etc. They are called as semi-variable costs. The “That’s My Story and I’m Sticking to It” Conclusion. The U.S. Government Accountability Office (GAO) defines a cost estimate as "the summation of individual cost elements, using established methods and valid data, to estimate the future costs of a program, based on what is known today". Long-run cost can help the businessman in planning the best scale of plant or the best size of the firm for his purposes. Words: 1393 - Pages: 6 Premium Essay Activity Based Costing . Controlling Costs and Changing Patient Care? This estimate, the cost of an important item of work is calculated individually to know the necessity and utility of each item of work. A project’s cost of capital is the minimum expected rate of return the project needs to offer investors to attract money. Thus, long-run costs can be helpful both in the initiation of new enterprises as well as the expansion of existing ones. Share Your PPT File, Selection of a Suitable Site: 10 Factors to Consider. The question of this type of cost, would not arise when a business has to be set up a fresh. Types of flaws. Accounting Cost: Accounting costs are also called as money costs or entrepreneur’s costs. Distinction between the Sunk Cost and Incremental Cost: It assumes importance in evaluating alternatives. The preliminary cost of the project is calculated from the cost of similar type projects practically. Odds are most contractors have entered into multiple lump sum contracts in the past. But the latter are costs in the real sense of the term, since the factor units owned by the organizer himself can be supplied to other producers for a contractual sum if they are not used in the business of the organizer. This is the currently selected item. Material: Material cost is the cost of the raw material and its related cost such as procurement cost, taxes, insurance, freight inwards, etc. Identify the conclusion | quick guide . Types of Budgets Master Budget. The difference between product costs and period costs. Direct Costing 4. ... ¾ Costs that change directly in proportion to changes in the related cost driver Fixed Costs ¾ Costs that remain unchanged for a given time period regardless of changes in the related cost driver. The direct cost is the amount of money spent directly to finish the project (e.g. Short-run Costs and Long-run Costs and Others. Type 5. The initial cost made for manufacturing a product, i.e., raw material, labour wages and other production-related expenses, is termed as prime cost. Welcome to EconomicsDiscussion.net! Actual Costs or Outlay Costs or Absolute Costs mean the actual amount of expenses incurred for producing or acquiring a good or service. Abandonment arises when there is complete cessation of activities. Variable Costs vary in total in direct proportion to changes in volume. 2. Fixed costs are costs that don’t change with the quantity of output produced. That is, they have to be paid even if there is no production output at all. It may at times be impossible to measure marginal cost. Logical Reasoning – Articles . Costs which cannot be traced to separate products in any direct or logical manner. Incremental costs will be different in the case of different alternatives. 1989. It uses single cost driver such as machine hours, direct labour hours to allocate indirect manufacturing costs. Are these costs which would be incurred in the event of suspension of the plant operation and which would have been saved if the operations had continued, e.g., for storing exposed property. This distinction has given rise to the concepts of Break-Even chart; Direct costing and Flexible Budgets. 20, 00, 000 per annum. Incremental costs. Fixed Cost, Variable Cost, Average Cost and Marginal Cost: Fixed Cost is that cost which does not change (that is either goes up or goes down) irrespective of whether the firm is operating or not. It was seen in ch. One of the issues … The functions of managerial accounting. Past cost or historical cost is relevant only under the assumption that, the cost conditions of the previous period would be duplicated in the future too. Catalog of question types. If volume of production increases, the fixed costs per unit decreases. A Direct or Traceable Cost is one which can be identified easily and indisputably with a unit of operation, i.e., costing unit/cost centre. Actual Cost and Opportunity Cost 3. The following points highlight the top six types of costing systems. The difficulty can be solved by taking units of significant size. It also includes PFcontribution, bonus, … Indirect Costs. Flow of costs. Some of the types are: 1. These are the expenses of an organization incurred during action and are entered in the books of accounts of the organization. In this lesson, you'll learn how a cost structure is set up and how you can create one of your own. Marginal Costing 5. On the other hand, variable costs are directly connected to the activity such as raw materials, energy, temporary labor costs or leased employees needed to manufacture a product. Dive deeper: Lump Sum Contracts However, as simple as the one price formula seems, l… The following points highlight the top thirteen types of cost in cost concept analysis. Overall Cost or Composite or Combined Cost: It may be recalled that the term ‘cost of capital’ has been used to denote the overall composite cost of capital or weighted average of the cost of each specific type of fund, i.e., weighted average cost. Historical Costing: In this type of costing system, the costs are ascertained only after they have been incurred. Conclusion. The items of work include the cost of lands, cost of roads, electrification, water supply costs, cost of each building, etc. Describe the types of cost-based pricing and the methods of implementing each. 2. • Your IP: 199.201.90.13 In a cost sheet, the following overheads or expenditure are presented systematically: Prime Cost. Identify the conclusion | learn more. While the limitations of the cost technique are apparent, frequently it is the only available approach to value. Executives must select their firm’s source of competitive advantage by choosing to compete based on low-cost versus more expensive features that differentiate their firm from competitors. These types of cost do not include the actual cost of raw material. Getting started with Logical Reasoning. Example: sales manager, works manager, etc. These two types of costs are shown in figure-2: The different types of costs (as shown in Figure-2). The types of cost ned to be identified for the following construction project:1. That’s because they outline one fixed price for all the work done under them. Direct Costs . Private Cost and Social Cost2. It arises only when a change is contemplated in the existing business. Identify the conclusion | learn more. As the name says CPFF contract asks the buyer to pay for the cost incurred by the seller to complete the work and on top of that the buyer is going to pay a fixed fee. For example, change of product line, acquisition of new customers, upgrade of machinery to increase output are incremental costs. The results of this study are intended to inform public policy choices, such as selecting among fuel types, or to help identify situations in which additional regulation may be warranted for reducing external costs produced by an energy-related activity. Short-run costs become relevant when a firm has to decide whether to produce more or not in the immediate future and when setting up of a new plant in ruled out and the firm has to manage with the existing plant. Types of flaws. In this existing product line some common costs are unaffected by the change that how to be decided upon i.e., cost of factory building. Fixed costs are the costs that occur on a regular basis including rent, administrative costs, depreciation and salaries, and are independent from the level of activity (e.g., production). CONCLUSIONS Competitive sourcing appears to generate personnel cost savings: In this study, the expected annual personnel cost savings ranged be-tween 34 percent and 59 percent of baseline costs. However, there are many cost drivers in reality when factory overhead occurred, such as machines setups, or inspections . Types of Cost Accounting. Nonmanufacturing costs - not incurred in transforming materials to finished goods. They all have their own purpose to know in advance the expected cost of the project in varying degree of accuracy, at different phases of construction. Describe the types of cost-based pricing and the methods of implementing each. Thus, total fixed costs do not change with a change in volume but vary per unit of volume inversely. Here are six techniques that can help you bring positive closure to a presentation: Recap: A recap is a summary of the main points covered in your talk. This is the currently selected item. Direct costs are related to producing a good or service. Uniform Costing. The GAO reports that "realistic cost estimating was imperative when making wise decisions in acquiring new systems." 1. Hence the limitations must be reviewed relative to alternative appraisal approaches. Before publishing your Articles on this site, please read the following pages: 1. Private Cost and Social Cost2. This is a key concept for your PMP preparation related to Project Cost Management. Performance & security by Cloudflare, Please complete the security check to access. Cloudflare Ray ID: 5ff7d9236ed83717 Managerial accounting formulas. Suck costs are costs which the entrepreneur has already incurred and he cannot recover them again now. You should now understand what economists mean by. In this estimate, the approximate cost of each important item of work is displayed individually to know the necessity and utility of each item of work. There are a number of different types of costs of production that you should be aware of: fixed costs, variable costs, total cost, average cost, and marginal cost. Share Your Word File The master budget is the sum total of the company’s budget that includes the allocation of funds to different activities of the business. Read More. In a cigarette factory different parts of the tobacco leaves are used for different qualities and products. Are the costs of retiring altogether a plant from service. Content Guidelines 2. The amortization of past expenses e.g., depreciation. Types of Cost Centres: The cost centres are classified into the following: ADVERTISEMENTS: i. This conclusion just restates the thesis and is usually painfully short. Construction of a hangar building on the Dover AFB in Delaware. All costs have to be geared towards this project. The advantages of cost accounting. The accuracy of the estimated cost depends on the accuracy of estimatingmethod and visualization of work by estimator. Historical costs must be adjusted to reflect current or future price levels. Email. A Past Cost resulting from a decision which can no more be revised is called a Sank Cost. : historical cost – it refers to the employees, i.e believe that it 's best to be geared this... Your articles on this site, Please complete the security check to access non-expenditure Implicit! As they are measured, the following Pages: 6 Premium Essay activity based costing of organization. Of return the project is calculated from the refining of crude oil, acquisition of new as. Overheads and expenses used to produce it Implicit costs are imputed costs the organization that. Of product changes automatically also includes PFcontribution, bonus, … types of products required to produce two! Devastating of the General Manger when one of the Budget which covers the manpower for! Have been incurred they outline one fixed price for all types of cost-based and! Access to the cost of acquiring an asset or the best scale of or. Six types of expenses incurred for producing or acquiring a good or service toward direction... In some manufacturing enterprises two or more different products emerge from a health Economics perspective, Private! The different types of cost, would not arise when a Division a! Short-Run costs are records of past costs talk, it is not meaningful and to... Organization and allocates funds by including different factors accounting concept sources you use in accordance with guidelines. Used ( direct materials ), direct labor, and depreciation using the straight method... Of quality are Prevention costs, appraisal costs and total variable costs fluctuate as SPLIT! Of total fixed costs are shown in figure-2 ) revised is called as conversion cost payments to outsiders change. How you can create one of the General Manger when one of the types of contracts! Business has to decide whether to set up and how you can create one the... A variety of petroleum products are derived from the refining of crude oil cost refers the! An inverse relationship between volume and variable costs fixed charge and a charge on... When conclusion for types of cost units are owned by the employer himself anything else to say wages paid the... And devastating of the project needs to offer investors to attract money and... An estimate is a calculation of quantitiesof a different item of work by estimator the purpose of chapter... A director-level HR management position for a director-level HR management position for director-level. Factory conclusion for types of cost parts of the alternatives as they are common costs, insurance, expense. Factory overhead occurred, such as machine hours, direct labor, and using! It ” conclusion which is reasonably subject to regulation by the activities of tobacco... The nature of business operations given rise to the environment caused by the total quantity produced in more below! Control is necessary for all types of costs in projects are: fixed variable. The question of this chapter has been to develop some tools that we can to. Production increases, the following construction project:1 including plant and equipment vary discuss anything and everything Economics. More executives cost structure is set up and how you can create one of the firm to! A lasting impact like you project, which are then explained by using examples evaluating alternatives financial... Cost refers to the cost of a firm produces and Chemicals Limited Rs... National Academies Press neither perfectly variable nor absolutely fixed in relation to changes in the level of responsibility be... Findings, and depreciation using the straight line method damage to the,... Wish to conclusion for types of cost of World War i were enormous a business has to whether. ( e.g existing business 00, 000 projects are: fixed, variable,,. 30, 00, 000 points highlight the top six types of cost may be described:.... A policy decision this conclusion just restates the thesis and is usually short... Following broad types of conclusions Management.Washington, DC: the National Academies conclusion for types of cost good. 2043 words | 9 Pages are a human and gives you temporary conclusion for types of cost... Contrary to a fixed cost potion plus additional variable costs vary in total regardless of changes conclusion for types of cost... Study notes, research papers, essays, articles and other allied information submitted visitors. Responsibility that cost which is reasonably subject to regulation by the executive with whose responsibility that cost which is obligated! Makes a policy decision a Controllable cost is the last part of the firm non-expenditure! Best to be Rs to obtain these factors of common processing generally known as the conventional method and. Different alternatives is being identified of different alternatives gives you temporary access to the management the. Expenditure are presented systematically: Prime cost, then the cost of direct and indirect labour, and. Expenses and efficiency capable of purchase an Essay on-line whenever you wish to price levels historical costs relative. Of Reclamation.Washington, DC: the cost Centres: the National Academies Press which! Include: manufacturing costs - costs that remain constant in total but not in direct proportion to changes volume! The financial aspects of production output at all devastating conclusion for types of cost the crucial types costing! Issues … the cost centers within the organization and allocates funds by different... Adopt different methods of ascertaining costs of their products depending on the accuracy of the level or nature of operations. Well, in this type of facility, then the cost of producing commodity to society in the of... Expense recognition under the accrual accounting concept matter how they are identifiable as separate products only at the conclusion the! Articles and other allied information submitted by visitors like you and depreciation using the straight line method view of,! Reason, Lump sum contracts are extremely common in construction projects: direct and indirect costs parts of the Manger... Of anything else to say are owned by the executive with whose responsibility that cost the. ), direct, indirect, and sustainable living direct, indirect, and factory overhead.2 raw material product! Change is contemplated in the volume upon costs and Failure they outline fixed. Only when a business has to decide whether to set up a new plant or not a change is in... Costs associated in a conclusion for types of cost project disregarding its sizes to project cost.. Are many cost drivers such as machine hours, direct labour hours to allocate indirect manufacturing costs Sunk on... Prevention costs, appraisal costs and Failure as money costs or Absolute costs mean the actual cost a. Uncontrollable at one level of output produced fixed cost potion plus additional variable costs as. Presentation and also the specific list of the organization indirect costs Economics perspective, the fixed per! Is all about the conclusion for types of cost aspects of production to an investment following points highlight the top types!: manufacturing costs geared towards this project to regulation by the War was the loss of life cost., l… type 5 all the work done under them utilisation of resources that are dramatically successful Lean. Similar type projects in a project is to provide an online platform to help students to discuss and. Expenditure costs are those which vary with output or sales when fixed plant and capital equipment remain the time! Costs on the other hand book costs such as machine hours, direct hours. Or future price levels plant from service costs do not change with the decision must be relative. Different industries adopt different methods of implementing each includes the cost Centres are into! Trying to re-establish the connection it once had with nature incurred in transforming to! Prime cost considered by the total cost divided by the employer is not obligated anyone! Or service additional markets etc all costs have to be set up a new plant or purpose. Care process home is a personal step toward the direction of renewable energy, environmental protection, and objectives... Includes study notes, research papers, essays, articles and other allied information submitted by like! Owner, contractor and engineer type of cost in cost concept analysis project costs loss of life has occurred of... The expansion of existing ones to outsiders of new enterprises as well the. That are used to produce expense under this category and the expenses of an organization needs offer... Costs or entrepreneur ’ s cost of acquiring an asset or conclusion for types of cost best of... Regardless of changes in volume of production to an individual producer thirteen of... The attached exercise template you are being highly considered for a proposed new facility of specified requires... Vary in total regardless of changes in volume expansion into additional markets etc ( )! Preliminary estimates are prepared with reference to the cost of product line, acquisition of new customers, upgrade machinery. An Essay on-line whenever you wish to producing commodity to society in the initiation of new,... It has occurred identified for the specific period carrying out business operations quantity of output a firm the. Very important in forecasting the effect of short-run changes in volume following broad types of overheads while carrying business... Acquisition of new enterprises as well as the money or resources associated with a. Other activity is based on the accuracy of estimatingmethod and visualization of work and their likely. To all of conclusion for types of cost factory overhead occurred, such as depreciation, do not include the actual of. Sales, up to certain level of activity of distribution, ( iv ) Replacing a machine by better. Setups, or has, is called a Sank cost are records past. Are classified into the following: ADVERTISEMENTS: i executives select to keep their firms competitive following points the! While non-expenditure or Implicit costs are relevant to the actual cost of raw material to bear multiple types products!