 NAME:- MEERA Ts RAJPUT

VARSHA A CHOUDHARY
 CLASS:- FY-BBA
 ROLL NO:- BB231097
BB231092
 SUBJECT:- COST OF ACCOUNTING
 TOPIC:- COST
 INTRODUCTION
• Cost is the value of money that has been used up to produce something or deliver
a service, and hence is not available for use anymore.
• In business, the cost may be one of acquisition, in which case the amount
of money expended to acquire it is counted as cost. In this case, money is the
input that is gone in order to acquire the thing.
• This acquisition cost may be the sum of the cost of production as incurred by
the original producer, and further costs of transaction as incurred by the acquirer
over and above the price paid to the producer.
• Usually, the price also includes a mark-up for profit over the cost of production.
 DEFINITION

 CIMA, UK :"The process of accounting for cost from the point at

which expenditure is incurred or committed to the establishment
of its ultimate relationship with cost centers and cost units”.
 C. Gilleapie :"Cost accounting is a set of procedure for
determining the cost of a product and various activities involved
in its manufacture and sales and for planning and measuring
performance”.
TYPES OF COST

Direct Cost

Opportunity Indirect
Cost Cost

TYPES OF
COST

Operating
Fixed Cost
Cost

Variable
Cost
 Direct Costs : Direct costs are related to producing a good or service. A
direct cost includes raw materials, labor, and expense or distribution costs
associated with producing a product.
 Indirect Costs : Indirect costs, on the other hand, are expenses unrelated
to producing a good or service. An indirect cost cannot be easily traced to
a product, department, activity, or project.
 Fixed Costs : Fixed costs do not vary with the number of goods or
services a company produces over the short term. For example, suppose a
company leases a machine for production for two years.
 Variable Costs : Variable costs fluctuate as the level of production output
changes, contrary to a fixed cost. This type of cost varies depending on the
number of products a company produces. A variable cost increases as the
production volume increases, and it falls as the production volume
decreases.
 Operating Costs : Operating costs are expenses associated with day-to-
day business activities but are not traced back to one product. Operating
costs can be variable or fixed.
 Opportunity Costs : Opportunity cost is the benefits of an alternative
given up when one decision is made over another. This cost is, therefore,
most relevant for two mutually exclusive events. In investing, it's the
difference in return between a chosen investment and one that is passed
up.
 CONCLUSION

 The conclusion of cost analysis depends on the specific context

and objectives of the analysis. It could involve identifying areas
of cost reduction, evaluating the cost-effectiveness of different
options, or determining the overall financial impact of a decision
or project. Ultimately, the conclusion should provide actionable
insights to help optimize resource allocation and improve
financial performance.