What is cost classification?

Answer 1

Cost classification refers to different kinds of existing costs in Economics.

In microeconomic theory, there are opportunity costs, fixed and variable costs, as well as sunk costs and production costs.

In accounting and management theory, costs can be direct and non-direct. There are also transferring costs and sunk costs (as in Microeconomics).

Answer 2

There are a number of problems associated with cost classification. The most common problem is having imbalanced classification which seems to favor a particular class.