What Is Cost Class 11?

What is the concept of cost?

Definition: In business and accounting, cost is the monetary value that has been spent by a company in order to produce something.

In a business, cost expresses the amount of money that is spent on the production or creation of a good or service.

Cost does not include a mark-up for profit..

What is cost and its types?

The two basic types of costs incurred by businesses are fixed and variable. Fixed costs do not vary with output, while variable costs do. Fixed costs are sometimes called overhead costs. … Variable costs, on the other hand, fluctuate in direct proportion to changes in output.

What is cost and types of cost in economics?

A list and definition of different types of economic costs. Fixed Costs (FC) The costs which don’t vary with changing output. Fixed costs might include the cost of building a factory, insurance and legal bills. … Variable Costs (VC) Costs which depend on the output produced.

Is rent a sunk cost?

A sunk cost refers to a cost that has already occurred and has no potential for recovery in the future. For example, your rent, marketing campaign expenses or money spent on new equipment can be considered sunk costs. A sunk cost can also be referred to as a past cost.

Which cost is known as work cost?

This preview shows page 5 – 7 out of 15 pages. Also known as works cost, production or manufacturing cost, Factory costincludesprime cost along with works or factory overheads. Factory overheads include cost ofindirect material, indirect wages, and other indirect expenses incurred in the factory.

How many types of expenses are there?

threeThere are three major types of expenses we all pay: fixed, variable, and periodic. Do you know the difference?

What are the two basic components of total cost?

Components of total cost are constituted mainly of prime cost, factory cost, office cost and cost of sales.

What are the three elements of cost?

The Elements of Cost are the three types of product costs (labor, materials and overhead) and period costs.

Is rent a fixed cost?

Unlike variable costs, a company’s fixed costs do not vary with the volume of production. Fixed costs remain the same regardless of whether goods or services are produced or not. … The most common examples of fixed costs include lease and rent payments, utilities, insurance, certain salaries, and interest payments.

What are the 3 types of cost?

The types are: 1. Fixed Costs 2. Variable Costs 3. Semi-Variable Costs.

What are the 4 types of expenses?

You might think expenses are expenses. If the money’s going out, it’s an expense. But here at Fiscal Fitness, we like to think of your expenses in four distinct ways: fixed, recurring, non-recurring, and whammies (the worst kind of expense, by far).

What is an example of a cost?

The definition of cost is the amount paid for something or the expense of doing something. An example of a cost is $3 for a half gallon of milk. An amount paid or required in payment for a purchase; a price. The expenditure of something, such as time or labor, necessary for the attainment of a goal.

What are the elements of cost?

Elements of CostDirect Material. It represents the raw material or goods necessary to produce or manufacture a product. … Indirect Material. It refers to the material which we require to produce a product but is not directly identifiable. … Direct Labour. … Indirect Labour. … Direct Expenses. … Indirect Expenses. … Overhead. … Factory Overhead.More items…

How is total cost calculated?

Add your fixed costs to your variable costs to get your total cost. Your total cost of living on your budget is the total amount of money you spent over a one month period. The formula for finding this is simply fixed costs + variable costs = total cost.