Write a memo to management detailing the various classification of cost and provide two reasons why it is important to classify cost

Answer:Explanation below.

Explanation:

Cost classification can be explained or described as the separation of a group of expenses into different categories.

The importance of cost classification system is to notify the management about certain costs that are considered more crucial than others.

Generally, there are three major categories of cost classification, these are

1. Fixed cost ... this is the cost of the fixed input that is used in production.

2. Variable cost ... It is the cost of variable input that is used in production.

3. Total cost ... It is the total cost used in production.