Semi Variable Cost Analysis

Costs are categorised as fixed costs, variable costs and semi-variable costs based on variability. They are outlined as follows:

a) Fixed cCosts: Costs whichthat do not change with the change in volume of production, are termed as fixed costs. For example, insurance of building.

b) Variable cCosts: Costs whichthat change with the change in volume of production are termed as variable costs. For example, direct material costs.

c) Semi-variable cCosts: These costs are the costs in which a part remains fixed up to a volume of production and becomes variable after a certain level of production. For example, telephone expenses whichthat are fixed up to the level of certain calls and then variable over and above that level.

On the basis of controllability,

In other words, job costing is used in organisations where the cost of each job is ascertained separately. For example, printing press, commercial foundries, and tool manufacturers, etc. In job costing, the following methods are used: o Contract Ccosting: This method is used in organisations which take large-scale contracts such aslike construction of buildings, roads, bridges and civil engineering contracts. In these contracts, there is single unit or manageable number of unitsthe cost unit is one and it is complete in itself. It is also known as terminal

Here, the unit of cost is a batch. In batch costing, the information on cost incurred is collected and analysed, and the cost is ascertained on the basis of the batch numbers. Batch costing is mostly used in pharmaceutical companies wherein the medicines and injections are manufactured in batches; and inwhereas engineering companies produceing technical components in batches.

• Process Costing: It involves determining the cost at each stage of the production process. This method of costing is mostly used in extractive industries such aslike chemical manufacturing, paints, food, soap making, etc and more. The following methods are used in process costing: o Single or Output Costing: It is used in organisations in which the production is uniform and a single product is manufactured. In this method of costing, the cost is ascertained per unit of output. This method is mostly used in industries like mining, flour mills and, steel works, etc. o Operation Costing: It is used in organisations where mass and repetitive production takes place. In this method of costing, the cost unit is an operation as the cost of each operation is ascertained in