Cost Accounting - Elements of Cost

Elements of Cost

  • Material (Material is a very important part of business)
    • Direct material
  • Labor
    • Direct labor
  • Overhead (Variable/Fixed)
    • Indirect material
    • Indirect labor
    • Maintenance & Repair
    • Supplies
    • Utilities
    • Other Variable Expenses
    • Salaries
    • Occupancy (Rent)
    • Depreciation
    • Other Fixed Expenses

(In some companies, machine cost is segregated from overhead and reported as a separate element)

They are grouped further based on their functions as,

  • Production or works overheads
  • Administration overheads
  • Selling overheads
  • Distribution overheads

Read more about this topic:  Cost Accounting

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