Direct labor costs and overhead costs are also called conversion costs. Cost Accounting Concepts Behavior -a cost can be classified as fixed or variable or mixed. Fixed cost-remains the same irrespective of the volume of an activity. Variable cost-changes in proportion to changes in the volume of an activity. Mixed cost-combination of fixed and variable costs.
Cost is classified as either a direct or indirect cost.
To classify must identify the cost object. Direct cost-incurred for the benefit of one specific cost object. Indirect costs-incurred for the benefit of more than one cost object. To classify must identify the management hierarchical level. Sunk cost one already incurred and cannot be avoided or changed.