Explain the following types of cost and indicate the appropriate basis of apportionment: imputed, incremental, relevant, standard, marginal costs; risk allowance, lighting, medical expenses.

Here are the explanations for the types of cost and the appropriate basis of apportionment for the expenses.

Explain the following types of cost:

a) Imputed cost: This is an opportunity cost that is not recorded in the accounting books, representing the value of a resource used in a project when no direct payment is made. For example, the implicit rent on an owner-occupied building.

b) Incremental cost: This is the additional cost incurred by producing one more unit or by making a specific change in the level of activity or output. It represents the difference in total cost between two alternatives.

c) Relevant cost: This is a future cost that differs between decision alternatives. It is a cost that is pertinent to a specific decision and will change as a result of that decision, excluding sunk costs.

d) Standard cost: This is a predetermined cost for a unit of product or service, used as a benchmark for measuring efficiency. It is an estimated cost based on efficiency and normal operating conditions.

e) Marginal cost: This is the change in total cost that arises when the quantity produced is incremented by one unit. It is the cost of producing one additional unit of output.

Indicate the appropriate basis of apportionment:

a) Risk allowance: Value of assets

b) Lighting expenses: Floor area

c) Medical expenses: Number of employees

d) Advertisement: Sales turnover

e) Depreciation of plant and machinery: Value of plant and machinery

f) Canteen expenses: Number of employees

g) Administration expenses: Number of employees