# 1.2 Other ways of classifying costs

In addition to the principal classifications of variable and fixed, we can identify several other classifications for costs, as outlined below.

## Table 2 Cost classifications

By nature | This would include material or labour. Classifying costs by nature can also be termed subjective classification.
By purpose | Direct or indirect. We will explore this further in this course. Classifying costs by purpose can also be termed objective classification.
By function | For example, production, administration or selling.
By how it behaves | Fixed, variable, semi-variable, stepped fixed.
Normal/abnormal | This considers whether unusual events have influenced costs.
Controllable/non-controllable | This is concerned with whether the manager, within whose area of the organisation a cost is incurred, can influence the cost.
Relevant/irrelevant | This distinction is used in decision making. Relevant costs are considered when making a decision, as they have a direct impact on the decision outcome. Irrelevant costs do not have an impact on the decision and are therefore not taken into consideration.

OpenLearn - Fundamentals of cost accounting and environmental management accounting
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