Song Essay

839 WordsNov 13, 20124 Pages
Classification of cost Planning Planning is a very general term which covers longer-term strategic planning and shorter-term operational planning. Longer-term strategic planning is focuses on the objective of company, and it also concern with the maximization of profit .Besides, shorter-term operational planning is referred to as functional strategic planning. It concentrates on the action of specific functions within the business. Cost that have to consider while planning: Direct cost * Is a cost that directly related to a particular object or service or location. * It can be classify into direct material, direct labour and direct expenses. * Example: Company produce a product .The cost of raw material, salaries for worker (who related to the production only) and any expenses incurred to produce the particular product. Those costs are regarded as direct cost. Indirect cost * Is a cost that indirectly related to a particular object or service or location. * Example: Company produces a product. The rental fee, salaries for administration (who is not related to the production) and any expenses that not related to the production such as electricity bill. Those costs are regarded as indirect cost. Control Once a decision has been taken, management must be in a position to control the activity and to have a view on whether the outcome is in accordance with the initial plans with the objectives derived from those plans .To implement the control process, individual managers will require timely, relevant and accurate information about the part of business for which they are responsible. Costs that have to consider while control: Controllable cost * Cost that can be control by management .Normally , it is refer to the variable cost * Example: If a company want to increase its output, company have many ways such as increase

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