Cost are classified into Fixed cost, Variable cost, Semi variable cost and step cost mainly. Fixed cost are such kinds of cost that is constant in per unit of time. With the increasg of the output the per unit cost is decreases. Another name of fixed cost is period cost. It is also divided into two class. These are commited fixed cost and discretionary fixed cost. Commited fixed cost is concerned with plant equipment and organization structure. Discretionary fixed cost is concerned with the management's decision. Just for example research and development cost, advertising cost budgets, production cost budgets, etc. Variable cost is directly proportional to the output and semi variable cost is proportional to the output but not directly proportional to the output. If fixed cost is found constant in a certain level and are found to jump in the next new level. Such behavior of cost is called step cost. Beside of these type of expanse there have another types of cost. These are indirect cost.
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