About This Chapter
Classifying Costs in Accounting - Chapter Summary
This chapter allows you to review details about definitions, formulas and examples of various types of costs that are calculated and recorded in accounting. You will study information about direct and indirect costs, fixed and variable costs, period costs and more. Lessons can be viewed as often as needed to ensure you understand all of the concepts discussed, and you can even reach out to the instructors with any questions via an online contact form. Assess your knowledge with quizzes contained in each lesson and use your Dashboard to track your progress through this chapter. Once your study is complete, you should be able to:
- Define and provide examples of direct and indirect costs
- Understand formulas used to calculate fixed and variable costs
- State the relationship between mixed costs and variable and fixed costs
- Calculate average total cost
- List types of period costs
- Differentiate between period and product costs
- Explain the use of sunk costs and how they impact decision making within a company
1. Direct Cost: Definition, Formula & Examples
This lesson explains direct costs. Included in the lesson is how they are calculated. You'll also have the chance to examine examples of direct costs.
2. What Are Indirect Costs? - Definition & Examples
This lesson explains what indirect costs are and how they affect a business. Examples of indirect costs and how they can vary in different businesses are given.
3. Fixed Costs: Definition, Formula & Examples
Understanding an organization's cost structure is essential for management to make appropriate investments. In this lesson, you'll learn the definition of fixed costs and why understanding fixed costs is an important part of financial management.
4. Variable Cost: Definition, Formula & Examples
In this lesson, we'll be looking at variable costs, which are those costs that change directly with production. After the lesson, you can test your knowledge with a short quiz.
5. Mixed Costs: Definition & Examples
In this lesson, we'll look at mixed costs. We'll define variable costs and fixed costs, and we'll look at how the two are related to mixed costs. Afterward, you can test your knowledge with a brief quiz.
6. Average Total Cost: Definition & Formula
Knowing and understanding cost structure is an important part of budgeting, production planning, and pricing decisions. In this lesson, you'll learn the definition and calculation of average total cost.
7. Period Costs in Accounting: Definition & Examples
In this lesson, we'll discuss the importance of accurately determining period costs. We'll also review accounting principles associated with classifying costs and examine types of period costs.
8. Product Costs in Accounting: Definition & Examples
This lesson provides the definition and example of what product costs are, how they differentiate from period costs, and how they are used on a cost of goods manufactured schedule in relation to financial statements.
9. Sunk Costs: Definition & Examples
In this lesson, sunk costs are defined and evaluated in the context of company decision making. Concepts are illustrated with examples from the construction industry and a small messenger business.
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Other chapters within the Financial Accounting: Help and Review course
- Introduction to Accounting: Help and Review
- Financial Statements in Accounting: Help and Review
- Mechanics of the Accounting Cycle: Help and Review
- Project Evaluation & Analysis
- Preparing Financial Statements: Help and Review
- Internal Controls in Accounting: Help and Review
- Merchandising Operations and Inventory in Accounting: Help and Review
- Current and Long-Term Liabilities in Accounting: Help and Review
- Adjusting Accounts & Preparing Financial Statements: Help and Review
- Taxation of Business Entities
- Accounting Changes & Errors
- Cost Accounting Methods
- Cash Flow Statements & Disclosures
- Asset & Inventory Management
- Small Business Financing
- Small Business Accounting
- Financial Reporting