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Classifying cost in
(1) element (i.e. Material, Labor or expense) is good for cost control.
(2) nature (i.e. direct and indirect) is good for cost accounting.Can you please define tutor how?
I have no idea where you read this!
For controlling costs we need to look at each type of cost separately to see whether or not we are spending too much.
For preparing cost accounts we need to distinguish between direct costs (which are variable) and indirect costs (which are fixed).
This is all explained in my free lectures.
Tutor a cost on rent of warehouse for storing goods ready for sale is production overhead or distribution expense? Actually, in absorption costing, I read that fixed production overheads are absorbed in product costs, of which one is stores. Now, I have seen it is classifying as distribution expense.
I hope I am able to transmit my question adequately.It is a distribution expense. Storing finished goods is not a cost of producing them.
Storing the raw materials waiting to be used in production is a production cost.
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