1) There are two main types of costs - assets which provide future benefits, and expenses which are consumed to produce revenue. Proper cost management involves effectively using both types of costs. 2) Cost drivers are the underlying factors that cause costs to be incurred, such as capacity, transactions, duration, and intensity. Management should focus on controlling cost drivers and unit costs. 3) Costs can be incurred at different levels - unit, batch, product, and facility. It is important to properly allocate costs to the correct cost level and cost object. 4) Cost behavior can be fixed, variable, step variable, or mixed. Understanding cost behavior is key to effective cost management and decision making.

1. The Nature of Costs Understanding is the Key to Control

16. Disaggregation of an Organization

20. Prevention, Appraisal and Failure Costs

23. Organizational Models Units Costs and revenues Fixed costs Revenue Total costs Variable costs Profit Loss

25. Organizational Models Units Costs and revenues Fixed costs Revenue Total costs Variable costs Profit Loss