ABSTRACT
Cost accountancy is concerned with the analysis of income and expenditure, and many such costs are not immediately identifiable with a particular division, department or product. Costs can be classified into two main headings when assessing cost behaviour. A fixed cost remains unchanged within given output parameters. A variable cost varies with changes in the level of activity. It can vary proportionately to sales or production. Products are costed by their three constituent elements of materials, labour and overheads. Materials and labour are easily measured for a given product or service, but the allocation of overheads is where the difficulty lies. The fixed overheads are the sum of the fixed indirect material, labour and expenses. Labour costs are the costs of those making the product or delivering the service, and their time can be measured accurately. It is not quite as simple as it may appear and is the subject of specialist training as a work study engineer.
