According to cost classification, costs can be classified into three categories based on their nature. These categories are:

a) Materials, Labor, and Expenses:

- Materials: This category includes the cost of raw materials and components used in the production process. It includes the cost of purchasing or acquiring materials, as well as any transportation or handling costs associated with them.

- Labor: This category includes the cost of labor required for the production process. It includes wages, salaries, benefits, and any other costs associated with hiring and retaining employees.

- Expenses: This category includes all other costs that are not classified as materials or labor. It includes costs such as rent, utilities, insurance, advertising, and administrative expenses.

b) Direct Costs and Indirect Costs:

- Direct Costs: These are costs that can be directly traced to a specific product or service. They include the cost of materials and labor directly involved in the production process. For example, the cost of raw materials used to manufacture a product would be considered a direct cost.

- Indirect Costs: These are costs that cannot be directly traced to a specific product or service. They include costs such as rent, utilities, and administrative expenses that are incurred for the overall operation of the business. These costs are allocated to products or services using allocation methods such as overhead rates.

c) Manufacturing Costs and Commercial Costs:

- Manufacturing Costs: This category includes all costs incurred in the production process, including the cost of raw materials, labor, and overhead expenses. It includes both direct and indirect costs associated with manufacturing a product.

- Commercial Costs: This category includes costs incurred in the marketing, distribution, and selling of products or services. It includes costs such as advertising, sales commissions, and transportation expenses.

d) Fixed Costs, Variable Costs, and Semi-variable Costs:

- Fixed Costs: These are costs that remain constant regardless of the level of production or sales. They include costs such as rent, insurance, and salaries. Fixed costs do not change in the short term.

- Variable Costs: These are costs that vary in direct proportion to the level of production or sales. They include costs such as raw materials and direct labor. Variable costs increase or decrease as the level of production or sales changes.

- Semi-variable Costs: These are costs that have both fixed and variable components. They include costs such as utilities and maintenance expenses, which have a fixed portion that remains constant and a variable portion that varies with the level of production or sales.

In conclusion, costs can be classified into three categories based on their nature: materials, labor, and expenses; direct costs and indirect costs; and manufacturing costs and commercial costs. Additionally, costs can also be classified as fixed costs, variable costs, and semi-variable costs based on their behavior with respect to changes in production or sales levels.