Costs are  categorized I  accordance to the variations in  the output, the volume and  the changes in  the activities as variable cost fixed cost and mixed cost.

Fixed costs

These are costs that   do not change with the changes in the cost  of  activities (Bozec & Bozec , 2010). These costs include the example of rent. For instance, a business set up which deals with sales of commodities like shoes or mobile phones, whether in a certain month there is an increase or decrease in the total number of sales, the rent for the building will just still remain constant.  The fixed costs can be controlled by cutting the hidden costs and the cost of services like jobs  and advertisement. They assist the management   to develop a financial model to predict the future costs hence the financial muscle of a business in the future.

Variable costs

These refers to the  costs which varies with the level of activities  or rather the with  the nature for production.  For example they include  the cost of raw  materials which implies that an increase in the level of production  results  to a significant increase in  the usage of the raw materials hence  the costs  of  the raw materials will also rise ant the vice versa is also  true for a decrease in the level of production. Variable costs can be controlled by controlling the level of expenses and by a constant monitoring of costs. This can help the management in planning  for the future  of the business based on the present trends in costs (Küçükaydin et al, 2011).

Mixed costs

This refers to the costs  that has b both the characteristics of variable  and  fixed costs. An example  of a mixed  costs includes  the cost of rent  and   that of  electricity bills.  An increase in the consumption of electric power results to  a significant increase in the  cost of rent  due to the increase in the  value of the  bill. This costs can be controlled by cutting the overhead costs of production by employing measure that  are more reasonable and cheaper in terms of economic value (Oberholzer & Ziemmerink, 2004). Tis therefore can help the management to develop a financial balancing system  by using a balance sheet or  an income statement  to determine the loss/ profit value of the business.