For decision-making purposes of management, costs can be classified into various types, such as Opportunity cost, Marginal cost, Differential/incremental cost, Relevant cost, Imputed cost, Replacement cost, Sunk cost,

Managers use cost accounting to help make business decisions based on efficient cost management. The types of costs evaluated in cost accounting include variable costs, fixed costs, direct costs, indirect costs, operating costs, opportunity costs, sunk costs, and controllable costs.

Costs may be categorized according to their: (1) function, (2) ease of traceability, (3) timing of charge against revenue, (4) behavior in accordance with activity, and (5) relevance to decision making.

In managerial accounting, costs are classified into fixed costs, variable costs or mixed costs (based on behavior); product costs or period costs (for external reporting); direct costs or indirect costs (based on traceability); and sunk costs, opportunity costs or incremental costs (for decision-making).