Resources
Cost-Type Accounting as the link between cost and financial accounting provides a systematic approach to categorizing and analyzing costs based on their nature and behavior. It helps organizations understand the different types of costs incurred in production and operations, enabling better cost management and decision-making. It answers the question: Which costs have been incurred?
Classification of Costs
Costs can be classified based on various criteria, including:
- Nature of input goods: Material costs, labor costs, machine costs, external services, etc.
- Attributability to cost objects: Direct costs vs. indirect costs
- Dependence on output variation: Variable costs vs. fixed costs
- Position in value chain: R&D costs, procurement costs, manufacturing costs, distribution costs, etc.
- Origins of input objects: Primary costs (from outside the company) vs. secondary costs (from within the company)
This module primarily uses a classification by the nature of input goods, structuring costs as material costs, labor costs, machine costs, and other costs (e.g., external services, energy, etc.).
In 2009, 30% of surveyed companies used more than 1000 cost classifications, with an average of 800. Using many categories allows for detailed analysis, however, requires significant effort to maintain.