BA4F04 Managing Financial Resources: Cost Classification Presentation

This presentation, prepared for the Fairfield School of Business's BA4F04 Managing Financial Resources module, provides a detailed overview of cost classification. It distinguishes between fixed, variable, and semi-variable costs, offering examples such as property taxes, depreciation, and salaries for fixed costs; and fuel expenses and electricity expenditure for semi-variable costs. It highlights the relationship between production volume and variable costs. The presentation also includes references to relevant academic sources, such as Cheung (2016) and Sarkar et al. (2016), to support the concepts discussed. This assignment helps students understand the different types of costs and their implications in business finance.

Managing Financial
Resources

Classifying various types of costs in the context of
business
Cost may be defined as sum of
expenses incurred by the firm in
production of goods or services.
Costs can be classified under
different heads which are-:
Fixe
d
Cost
s
Variable
Costs
Semi-variable
costs

Continued…
Fixed Costs-: It implies for the one
which remains constant at each level
of production. Examples of fixed
cost are presented in the chart such
as:
Property
Taxes
Depreciati
on Insurance
Interest Salaries Utilities
Rent

Continued…
Semi Variable Costs-: These are the costs that are mix of variable cost and
fixed costs after an specific level of output is achieved. The portion of fixed
costs occurs repeatedly whereas variable cost incurred as per the production
capacity (Sarkar and et.al., 2016). These costs are important for companies for
planning output levels. For example-:
Fuel expenses
 Electricity expenditure

Continued…
Variable Costs-: These are
the costs that changes with
the production. Variable
costs are increased and
decreased as per the
production volume of the
company. If the production
increases the cost increase
and vice versa

REFERENCES
Cheung, S.N., 2016. Economic organization and transaction costs. The New Palgrave Dictionary of
Economics. pp.1-5.
Gu, T., Simunic, D.A. and Stein, M.T., 2017. Fixed Costs, Audit Production, and Audit Markets,
Theory and Evidence. pp.25-27
Sarkar, B., and et.al., 2016. Effect of variable transportation and carbon emission in a three-echelon
supply chain model. Transportation Research Part E: Logistics and Transportation Review. 91,
pp.112-128.
Schill, W.P., Pahle, M. and Gambardella, C., 2017. Start-up costs of thermal power plants in markets
with increasing shares of variable renewable generation. Nature Energy. 2(6). p.17050.
Variable Costs. 2018. [Online]. Available Through <https://www.accountingtools.com/articles/what-
are-examples-of-variable-costs.html>

THANK YOU