You have just been appointed the cost accountant of AMINIYA MANUFACTURING LTD. The management of the company, prior to your appointment have always resorted to the work of consultants in costing and pricing products. At your interview, you had indicated to management the importance of cost and the various classifications of costs. The interview panel, very enthused with your explanations decided to engage your services as an employee- thus, your appointment as a cost accountant.

Required to:

Write a memo to management detailing the various classifications of costs and provide two reasons for which it is important to classify cost.

Note: The memo should contain at most 200 words and at least 150 words.