Explain Different Types Of Costs And How To Calculate Them


Explain how you would analyse cost information within a business.

You will need to:

·    explain how you would classify different types of cost

For this you need to describe the different cost types – such as fixed, variable, semi variable -and why certain costs are allocated to each cost type – for example Rent would be classified as a Fixed Cost.

·    explain why you would use different costing methods

Here you need to briefly describe the different costing methods – such as job, standard, activity based, service, batch costing – and why, in what circumstances/ types of organisation, would one be selected rather than another.

·    explain how you would calculate costs using appropriate techniques

For this you will need to briefly describe the different techniques – such as absorption, marginal, cost plus – and how to use each one – ideally with one actual example.

·    explain how you would analyse cost data using appropriate techniques

Here you will need to describe how, in what situations, you would use technique such as sampling, break-even, cost-benefit analysis.


The question belongs to Finance and it discusses about the cost information of an organization and how different types of cost are classified, costing methods, calculating costs using appropriate techniques and how to analyze cost data using appropriate techniques.

Total Word Count 451

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