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CMA Foundation · Fundamentals of Financial and Cost Accounting · Classification of Costs (CAS 1)

A cost that is ascertained after the event, on the basis of actual expenditure recorded in the books for a completed job, is best described as:

Historical cost is the correct answer because it is ascertained after the event from actual expenditure recorded in the books. Standard and estimated costs are fixed in advance, while opportunity cost refers to the benefit forgone from the best alternative, not recorded spending.

  1. AHistorical costCorrect
  2. BStandard cost
  3. CEstimated cost
  4. DOpportunity cost

Explanation

Historical cost is computed after the expenditure has been incurred, using actual figures from the books. Standard and estimated costs are predetermined before production, so they do not rely on actual recorded outlay. Opportunity cost is the value of the next best alternative forgone, not a recorded expenditure.

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