The correct answer is C. to identify costs.
Classification of cost is useful to identify costs. This is because it allows businesses to track their costs and see where they are spending money. This information can then be used to make decisions about how to improve efficiency and reduce costs.
For example, a business might classify its costs into direct costs and indirect costs. Direct costs are costs that can be directly attributed to a particular product or service. Indirect costs are costs that cannot be directly attributed to a particular product or service. This information can be used to make decisions about how to price products and services.
A business might also classify its costs into fixed costs and variable costs. Fixed costs are costs that do not change with the level of production. Variable costs are costs that change with the level of production. This information can be used to make decisions about how to manage production levels.
Overall, classification of cost is useful to identify costs. This information can then be used to make decisions about how to improve efficiency and reduce costs.
Here is a brief explanation of each option:
- A. to find gross profit: Gross profit is a measure of a company’s profitability. It is calculated by taking the company’s revenue and subtracting the cost of goods sold. Classification of cost is not necessary to calculate gross profit.
- B. to find net profit: Net profit is a measure of a company’s overall profitability. It is calculated by taking the company’s gross profit and subtracting its operating expenses, interest expense, and taxes. Classification of cost is not necessary to calculate net profit.
- C. to identify costs: Classification of cost is useful to identify costs. This is because it allows businesses to track their costs and see where they are spending money. This information can then be used to make decisions about how to improve efficiency and reduce costs.
- D. to identify efficiency: Classification of cost is not useful to identify efficiency. This is because efficiency is a measure of how well a company uses its resources. Classification of cost does not provide information about how well a company uses its resources.