Definition of Cost

A business organisation has different types of expenditures which includes expenditure in relation to the labour and other equipments and the cost is usually assigned to these expenditures incurred by the organisation.

Types

In the accounting assignment there are different types of costs in the organisation which includes:

Actual Costs: Actual Cost is referred to those costs which are included in producing a particular product.

Opportunity Costs: Opportunity costs specifies about the costs of the different types of costs which are available to the organisation.

Direct Costs: Direct Costs are those costs in which the costs are directly related with with the operational activity of the organisation.

Sunk Costs: Sunk costs are those costs, which cannot be avoided by the organisation. Sunk costs are those costs which do not change on the basis of any organisational functions.

Elements

In the accounting assignment there are different elements of costs which include:

Direct Labour Costs: Direct labour costs are those costs which show the total of labour costs which are directly related to the production of commodities in the organisation.

Direct Material Costs: Direct material costs means those costs which highlights about total of those material costs which are directly related to the production of commodities in the organisation.

 Overhead costs: Overhead costs are those costs which highlights about the total of those overhead costs which are directly related to the manufacturing of goods in the company.

Determination of cost of goods sold

In the accounting assignment cost of goods sold is usually determined in these different procedures:

  • Evaluation of the number of production outputs and the costs of these  outputs
  • Then calculate the production outputs by deducting the output produced during the end period with the output produced during the beginning of the period.
  • In order to know the costs of the products manufactured add the cost of production from the output produced during the beginning period.

Meaning of Cost Accounting

Cost accounting is generally defined as the something in which the production costs are calculated by evaluating the different fixed costs and the input costs.

Types

Standard Accounting: Standard Accounting refers to that accounting in which the costs are are calculated as per the principles of accounting. As per the principles the fixed costs of the organisation are calculated along with the variable costs.

Environmental Accounting: The environmental accounting is the innovative method of accounting in which the environmental aspects are considered which producing a commodity.

Lean Accounting: Lean Accounting refers to those accounting in which the main objective of a particular organisation is to handle the organisation.

Activity based accounting: Activity Based accounting is the process in which the cost is determined as per the consumption process.

Benefits

As per the assignment there are different benefits which include:

  • If there is any minor change in the costs of the production then these costs can be known.
  • The procedures in relation to the determination of cost of goods sold helps in analyzing whether there any direct or indirect costs involved
  • There are different accounting principles which help the organisation in determining the goals in relation to the costs.