Product Cost: The cost which is directly involved in manufacturing a product.

Ex: dm, dl, moh

 Direct Materials that can be conveniently traced to a product (such as wood in a table)
 Direct labor-Labor cost that can be physically and conveniently traced to a product (such as
assembly-line workers in a plant).
 Manufacturing overhead-All costs of manufacturing a product other than direct materials
and direct labor (such as indirect materials, indirect labor, factory utilities, and depreciation
of factory buildings and equipment).
Period Cost: It is also known as non manufacturing cost. The cost which is not directly involved
in manufacturing a product. Ex: selling, marketing, office & administrative expense
 Selling cost-All costs necessary to secure customer orders and get the finished product or
service to the customer (such as sales commissions, advertising)
 Administrative cost-All costs associated with the general management of the company as a
whole (such as executive compensation)
Variable cost: The cost which changes with the direct proportion of production unit. Ex: DM,
DL
Fixed cost: For a specific time period the cost which remains fixed even though the change of
production unit, is known as fixed cost. Ex: Wages, Salary, House Rent
Mixed cost: Combination of fc & vc. Ex: Telephone Bill
Direct cost/expense: are those costs which can be directly allocated to particular job, process or
product. Ex-excise duty, royalty etc.
Indirect cost/expense: are those cost which cannot be directly allocated to particular job,
process or product. Ex-factory rent.
Differential cost: Costs that differ between alternatives are called relevant costs.
Sunk cost: a sunk cost is a cost that has already been incurred and cannot be avoided regardless
of what a manager decides to do. For example, suppose a used car dealer purchased a five-year
old Toyota Camry for $12,000. The amount paid for the Camry is a sunk cost
Opportunity cost: Opportunity cost is the potential benefit that is given up when one alternative
is selected over another.