Concept of cost, classification of cost on the basis of production and process, element, functions, variability and controllability
The amount of resources that is given up in exchange of some goods or services is Cost. The given up resources are in terms of money or monetary units. Cost centre is an individual or group of similar activities for which costs are accumulated. A cost unit is a cost per unit of any service or product including fixed and variable costs during its production phase.
Cost accounting is the branch of accounting that deals in the classification, allocation, recording, summarization and reporting of costs. Cost accounting aims to assist the management in planning and decision making processes. It emphasizes cost control.
Depending upon the product’s nature, its production method and some specific business conditions, business enterprises use different costing methods. Specific order costing is the type of costing method whose main users are those type of business enterprises that are involved in construct jobs or products. Continuous operation costing is generally used by such organizations which are involved in the mass production of products through continuous operations.