There are different cost classifications in business such as direct and indirect costs, manufacturing and non-manufacturing costs, product costs and period costs, variable and fixed costs, differential costs, sunk costs and opportunity costs.You willalso learn how to prepare a contribution format income statement as compared to the traditional income statement .

Participate in the discussion considering the following questions:

1. Why is it important to understand the nature of costs? Cite some examples and real work application
2. Provide a situation when knowledge of these different cost concepts matter? Cite some examples and real work application