Classification on the Basis of Time

           Classification on the Basis of Time

 (a) Historical cost: These costs are ascertained after they have incurred. Such
costs are available only when the production of a particular thing has already
been done. They are objective in nature and can be verified with reference to
actual operations.
(b) Pre-determined costs: These costs are calculated before they are incurred on
the basis of a specification of all factors affecting cost. Such costs may be :
(i) Estimated costs: Costs are estimated before goods are produced; these are
naturally less accurate than standards.
(ii) Standards costs: This is a particular concept and technique. This method
involves:
(a) Setting up pre-determined standards for each element of cost and each
product;
(b) comparison for actual with standard; and
(c) pin pointing the causes of such variances and taking remedial action.
Obviously, standard costs, though pre-determined, are arrived with much greater