Cost Accounting Basic Concepts
The term ‘cost’ means the amount of expenses [actual or notional] incurred on or attributable to specified thing or activity. As per Institute of Cost and Work Accounts (ICWA) India, Cost is ‘measurement in monetary terms of the amount of resources used for the purpose of production of goods or rendering services.' ELEMENTS OF COST Cost of production/manufacturing consists of various expenses incurred on production/manufacturing of goods or services. These are the elements of cost which can be divided into three groups : Material, Labour and Expenses Material For production of goods and even in some cases rendering of services, material is needed. This material can be in the form of Raw material or finished goods. As discussed in class a majority of the products in the world that you see are a result of assembly- from the ball point pen in your hand to the expensive handset. This in turn can be classified as direct material or indirect material As the name indicates direc...