Classification of costs

A Classification of costs means, the grouping of costs according to their common characteristics. The important ways of classification of costs are: By Nature or Traceability: Direct Costs and Indirect costs. Costs in a company is a very important component in supporting. The implementation of activities in an attempt to reach the goal. That goal can be achieve if the costs incur as a form of sacrifice by the companies. In question have been taken into account appropriately. In determining whether an expense is a sacrifice or not, then it must first be understood notion of costs:

Costs is the price of the acquisition was sacrifice or use in order to earn (revenue) and will be use as a deduction of earnings.

In the broad sense is the cost:

The sacrifice of economic resources, which measure in units of money. That happen or is likely to occur to achieve a particular goal. In the narrow sense refers to a sacrifice of economic resources. To acquire assets that are call by the term cost of goods. In the sense of other costs are part of the cost of goods sacrifice in an attempt to obtain earnings.

From an understanding of the above. Although it appears there are differences but basically have the equation. Namely the cost is economical sacrifice, which measure the value of money to acquire goods or services.

Classification costs or cost classification is carry out in accordance with the objectives of the cost itself. For different purposes, necessary way classification costs.

The accounting books in Supriyono cost. The collection of costs and the determination of the price of the staple (1999:18) classifies costs as follows:

Cost Classification in accordance with the principal function of the activities/ the company's activity.

On the basis of the principal function of the activity or the activity of the company, costs can be group into:

Production Function.

All costs associate with the production or processing activities function raw materials into a finish product that is ready for sell.

Marketing function.

The function that is associate with the incidence of sales of finish product ready for sale. By way of satisfying buyers and can gain profit as desire until the company with cash collection and results the sale.

Public administration and is a function.

That is associate with the determination of the policy, direction and supervision of the activities. The company as a whole in order to be successful in order to (effectively) and efficient.

Financial functions.

Functions related to financial activities or the provision of the necessary funds of the company.

2. Classifications of fees in accordance with the accounting period in which the costs will be charge. To be able to classify expenses (expenditures) will apply to such expenditure when will be the cost.
   Classification of expenditure are as follows:


3. Capital Expenditure (Capital Expenditures). That expenditure will be able give a benefit (benefit) on some of the accounting period or the expense will come. At the time of the occurrence of these expenditures capitalize into the price of the actual earnings. Even and are treat as expenses in the accounting period which is enjoying its benefits.


4. Expenditures Revenue (Revenue Expenditures). Expenditures that would benefit only in the accounting period in which the expenditure occur. Generally, at the time of the occurrence of direct expenditure to be treat into the cost, or not capitalize as assets.


5. Classifications of fees in accordance with the tendencies of change in activity or activities against the volume.

Classification costs in accordance with the tendency towards a change in activity especially for the purpose of planning and cost control and decision making. The change tendency towards activities can be group into:

Fixed cost

fixed cost has the following characteristics:

• The total amount of the costs that remain constant is not affect by changes in the volume of activity or activity up to a certain level.


• At a fixed cost, charge unit (unit cost) will change inversely proportional to changes in sales volume, the higher the volume the lower the unit cost of the activity, the lower the volume of the activities of the higher cost of the unit.

Variable cost

variable cost has the following characteristics:

1. The total amount of the Stay will be change in proportion (proportional) and changes in the volume of activities, the greater the volume of activity the higher the total amount of variable costs, the lower the volume of the activities of the lower amount of variable costs.


2. On variable costs, the cost of a unit is not affect by the volume of activity, so the cost of the more constant.


3. Cost of semi variable

Cost of semi variable has the following characteristics:

1. The total amount of the Stay will be change according to changes in the volume of activities, but the nature of the changes are not comparable. The higher the volume of activity the greater amount of the total cost, the lower the volume of the activities of the lower costs, but the changes are not comparable.


2. On the cost of semi variable cost, the unit will be turn upside down is associate with changes in the volume of activities but its nature is not comparable. Up to a certain level of activity the higher volume of activity of the lower unit cost, the lower the volume of the activities of the higher cost of the unit.


3. Assignment costs correspond to an object or a cost center is finance within the company objects or cost center can be connect with a product that is produce, the existing departments in the factory, the area of marketing, parts in other organizations, and even individuals.

Cost Categorization on the basis of an object or the center costs, costs can be divide into:

1. Direct costs (Direct cost)
   direct costs are the costs that the occurrence or its benefits can be define to an object or specific cost center.


2. Indirect costs (Indirect cost)
   indirect costs are costs that the occurrence or its benefits cannot be define on a specific object or cost center, or the cost of the benefits enjoy by some object or cost center.


3. Cost Classification for cost control

To control the information shown to cost management are group into:

1. The costs of unrestrained (Controllable cost)
   Cost under control is the cost of that directly can be affect by a leadership/leadership in a particular

Period of time.

1. The Costs of unbridled (Uncontrollable cost)
   uncontrolled Cost is a cost that cannot be influence by a specific term/leader base on power that he owns it or not can be affect by a officials in a certain time.


2. Cost Classification in accordance with the objectives of decision making for the purpose of decision-making by management then the costs can be group into:
   

   A. The cost of relevant (Relevant cost)

   
   Relevant Cost is the cost that will affect decision making, therefore these costs must be taken into account in decision-making.
   

   B. Cost irrelevant (Irrelevant cost)

   
   Costs that are not relevant are costs that do not affect decision making, therefore these costs need not be calculate or taken into consideration in the process of retrieval decision.

Cost Categorization on the basis of a perception that changes to certain activities is very important in the planning process. These costs are group into fixed costs, variable costs and the cost of semi variable. For the purposes of analysis, break even cost of semi variable will be on further analysis into fixed costs and variable costs.

Fixed Cost

fixed cost is the total amount of fees fixed in the specific activity of the volume change in kisar. According to Mulyadi (1999:507) declares the fixed costs in relation to planning and monitoring costs, fixed costs are distinguished into

Commit fixed cost

Discretionary fixed cost

fixed cost Commit fixed costs are incur, which cannot be reduce in order to maintain the ability of companies to meet long-term goals. Example: commit fixed cost is the cost of depreciation, taxes, rental buildings and Earth, insurance and salaries of the employees. The policy became a commit fixed cost is primarily determine by long term activity plan.

Discretionary fixed cost is the cost arising from the decision of providing regular budget (usually annual) that directly reflect the policy top management regarding the maximum number of allow charges for issue, and cannot describe the relationship between the optimum input with the output (which in size with the volume of sales, services or products). Example: discretionary fixed cost is the cost of research and development, advertising costs, costs of sales promotions, employee training program costs, costs of consultants.

Variable cost

variable cost is the cost of the total amount of change is proportional to the change in the volume of activity. An example is the cost of materials and direct labor cost. For the purpose of planning and monitoring, variable costs are distinguish into:

Engineer variable cost

Discretionary cost

variable cost is the cost of Engineer that have specific physical relationship with the size of a specific activity or expense between input and output have close relationships and real. For example: the cost of raw materials.

Discretionary variable cost is the amount of expenses in total in proportion to the change in the volume of activities as a result of the policies/decisions of management. For example: advertising costs are set by management.

Cost of semi variable

Cost is the variable cost that spring has elements of fixed and variable in it. The elements of the fixed cost is the amount of the minimum cost to provide services while the element variable is part of variable spring costs are affect by changes in the volume of activity.

Semi variable Costs have elements fixed costs and variable costs. To separate the cost of semi variable into fixed costs and variable costs, there are two approaches that are use are:

1. 
   

   Approach the analysis (Analytical approach)

   
   in this approach held in cooperation between the techniques with the preparation of the budget for holding the inquiry against each activity or work, to determine whether it needs to be a fee, the amount of costs on a wide range of activities for a particular job, the method of execution of the work most efficient, and the amount of the fee concerned with the execution of the work at various levels of activity.


2. 
   

   historical Approach (Historical approach)

   
   This approach tries to determine cost functions by way of analyzing the behavior of costs. That occur in the past in relation to the volume of activity. In the historical approach, the cost data for several periods of collect and count on fix costs. And costs from using certain methods.  There are three methods that can be used are:

The method of cost of Awake (Stand-by Cost Method),

1. This method tries to calculate some of the costs that must be incur. If the company remain in close for a while. So the product equals zero. These costs in call costs and costs of awake, awake is a part.


2. The method of Lowest and highest point (Hight and Low Points Method). This method is a technique of separation of variables cost by way of comparing the costs at the level of the activity compare. To those costs at the lowest level of activity in the past. The difference in cost is the variable cost items count in those costs. While fixed costs reduce cost variable cost from semi-annual.


3. The smallest Squares Method (Least Square Method). This method assumes that the relationship between the cost and volume of activities shape with straight line equation.

Y = a + b x

where:
Y = Total cost of semi variable
a = fixed cost
b =
unit variable costs n = the number of data
x = Volume the activities of the