The document discusses different types of costs that are important accounting concepts. It defines accounting costs and economic costs, and explains the difference between the two. It also defines and provides examples of various types of costs, including outlay costs vs opportunity costs, direct vs indirect costs, and fixed vs variable costs. The document aims to help students preparing for the CA CPT, CS, and CMA foundation exams understand these fundamental cost concepts.

1. MeraSkill.com Online preparation for CA CPT,CS & CMA Foundation exam
Types of Cost
MeraSkill.com Online preparation for CA CPT,CS & CMA Foundation exam

2. MeraSkill.com Online preparation for CA CPT,CS & CMA Foundation exam
Types of cost

3. MeraSkill.com Online preparation for CA CPT,CS & CMA Foundation exam
Cost concepts
Accounting cost and Economics cost
Outlay costs & Opportunity costs
Direct or traceable costs & Indirect or non- traceable cost
Fixed & variable cost

4. MeraSkill.com Online preparation for CA CPT,CS & CMA Foundation exam
Accounting Cost vs Economics Cost
Accounting cost (Explicit cost)
Salary paid to workers , Rent paid
Cash outflow
Implicit cost
Owner {Capital Invested + Self time invested}
No cash outflow
Economic cost = Accounting cost + Implicit cost
Economics Profit = Revenue- Economics cost .
Accounting Profit vs Economics Profit

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Outlay cost vs opportunity cost
Outlay cost= expenditure of funds. recorded in books.
Opportunity cost = cost of forgone opportunity.Not recorded in
books.
Example- Cost of education

6. MeraSkill.com Online preparation for CA CPT,CS & CMA Foundation exam
Direct vs Indirect Cost
Direct or traceable cost
traceable with product
Ex-Raw Material , direct wages
Indirect or non-traceable cost
Not traceable with product
Ex- Office Rent, Marketing expense, Travel bills

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Fixed vs Variable cost
Fixed or constant cost
Vary not with output but capacity level.
Unavoidable
programed fixed cost
Ex- Rent,Interest on loan
Variable cost
vary with output
Ex-Raw material, wages etc

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MeraSkill.com Online preparation for CA CPT,CS & CMA Foundation exam