Costing system – the system that an organisation has developed to collect information about costs and income so that it can be used to help with decision making, planning and control.

Management accounting – the area of accounting that includes costing: it concentrates on providing internal information about the future in a form that is useful; it has no externally set rules that must be followed.

Financial accounting – the area of accounting that includes book-keeping; it concentrates on providing historic information that can be used internally and also provided to external parties.

Budget – a future plan for an organisation, showing all the detail in financial terms; it is usually made up of various individual budgets.

Cost classification by element – grouping costs together according to the type of cost based on three categories – materials, labour and expenses (overheads).

Cost classification by nature – grouping costs together according to whether they are direct costs or indirect costs.

Direct costs – costs that are directly identified with the units of output (the products or services that the organisation makes or provides)

Prime costs – a term relating to the total of direct costs; it is often used to describe the total direct cost for a unit of output.

Indirect costs (overheads) – costs that are not directly identified with the units of output; these costs are divided into production and non-production costs in a manufacturing organisation.

Cost of production – a term relating to the total of direct costs and indirect production costs (production overheads).

	Created by tomfaulkner over 6 years ago

Accounts (Basic costing) Note on Basic CostingChapter 1,2,3, created by tomfaulkner on 05/20/2013.

Basic CostingChapter 1,2,3