Explain Normal and Abnormal Costs.

Explain Normal and Abnormal Costs.


Normal Cost are the normal or regular costs which are incurred in the normal conditions during the normal operations of the organization. They are the sum of actual direct materials cost, actual labour cost and other direct expense. Example: repairs, maintenance, salaries paid to employees.

Abnormal Cost are the costs which are unusual or irregular which are not incurred due to abnormal situation s of the operations or productions. Example: destruction due to fire, shut down of machinery, lock outs, etc.

Explain Opportunity Cost and Differential Cost.
Opportunity Cost is the cost incurred by the organisation when one alternative is selected over another..
Define Sunk Cost.
Sunk Cost is the sum that has already been incurred and cannot be recovered by any decision made now or in future. …
What things would you take into consideration while installing a costing system?
Following things should be taken into consideration while installing a costing system:..
Post your comment