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Costing

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ASSIGNMENT ON COSTING

Submitted By, MOHAMMED NAFAISE

QUESTIONS

1. Define the term cost. Explain various types with relevant examples?

2. Methods and techniques of with relevant industrial examples?

COST
The cost is defined as the amount which is paid or given up to get something or to achieve the objective of the business. In business the objective may be to make a product, to provide a particular service and so on. Cost is usually a monetary valuation of effort, material, resources, time and utilities consumed risks incurred, and opportunity forgone in production and delivery of a good or service.
The costs incurred by a business may be classified in various ways and one important way is according to how they behave in relation to changes in the volume of activity. There are:

Based on behavior two types of cost are there
1.FIXED COST: those are fixed when changes occur to the volume of activity.
Ex: the salary of employees, rent…
2.VARIABLE COST: these are cost which vary according the volume of activity.
Ex: cost of raw materials used in manufacturing a product.
DIFFERENT TYPES OF COST WITH EXAPLES

* SEMI-FIXED(SEMI-VARIABLE )COST: In some cases, particular costs have an element of both fixed and variable cost. Thesecan be described as semi-fixed (semi-variable) costs. * Ex: telephone bill, electricity bill. * Actual Cost
Actual cost is defined as the cost or expenditure which a firm incurs for producing or acquiring a good or service. The actual costs or expenditures are recorded in the books of accounts of a business unit. Actual costs are also called as "Outlay Costs" or "Absolute Costs" or "Acquisition Costs".
Examples: Cost of raw materials, Wage Bill etc.

(B) Opportunity Cost
Opportunity cost is concerned with the cost of forgone

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