- The process of grouping expenditure according to common characteristics. Costs are initially divided into capital expenditure and revenue expenditure. In a production organization the revenue expenditure is classified sequentially to enable a product cost to build up in the order in which these costs tend to be incurred. Revenue costs would normally include:• direct material,• direct labour,• direct expenses,• manufacturing overheads,• administration overheads,• selling overheads,• distribution overheads,• research overheads.
Accounting dictionary. 2014.
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