What are the two main types of costs recognized in managerial accounting?

The two main types of costs recognized in managerial accounting are direct and indirect costs. Direct costs can be traced directly to a specific product, department, or project, such as raw materials and labor directly used in production. Indirect costs, on the other hand, cannot be traced to a specific cost object easily and often include overhead costs such as utilities, rent, and salaries of support staff.

While fixed costs and variable costs are also important distinctions in managerial accounting—fixed costs remain constant regardless of production levels, while variable costs fluctuate with production volume—these categories pertain more to how costs behave rather than the fundamental classification of costs themselves.

Controllable and uncontrollable costs focus on a manager's ability to influence these costs, which are indeed significant for budgeting and performance evaluation. However, they don't represent the primary ways costs are categorized in managerial accounting.

Sunk costs and marginal costs are relevant for decision-making and analysis purposes. Sunk costs are costs that have already been incurred and cannot be recovered, while marginal costs represent the additional costs incurred from producing one more unit. Although these concepts are crucial, they do not encompass the main types of costs recognized in the field.

Thus, understanding the distinction between direct and indirect costs is a fundamental aspect of managerial