Costs may be classified in a number of ways including by behaviour, function, expense type, controllability and relevance to meet different purposes such as the planning, controlling, decision-making.

1. Assume yourself as a management accountant of a company. Prepare a report for the Managing Director of your company explaining how costs can be classified by their behaviour, function, expense type, and controllability to meet the planning, controlling, decision making purposes.
2. In the report, also discuss why recognizing opportunity cost by managerial accounting is necessary while financial accounting tends to ignore such cost.