{"id":7922,"date":"2013-01-29T08:44:19","date_gmt":"2013-01-29T08:44:19","guid":{"rendered":"http:\/\/vskills.in\/certification\/tutorial\/?p=7922"},"modified":"2024-04-12T14:13:54","modified_gmt":"2024-04-12T08:43:54","slug":"costing-auditing","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/costing-auditing\/","title":{"rendered":"Business Accounting Tutorial | COSTING & AUDITING"},"content":{"rendered":"
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The motive of an organization is always profit maximization (except non-profit organization (NGO)). This profit can be increased either by increasing the sale price or by reducing cost. In today’s competitive world it is difficult for a firm to manage price and any tendency to increase price may shift the customer base to its competitor’s. Therefore the firm has to accept the price prevailing in the market. In order to be in the league, the emphasis is on cost reduction, which requires having complete knowledge of the associated costs and their components.<\/p>\n

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In layman’s language cost is the price paid for a thing. In accounting terms, costing is defined as something of value, usually, an amount of money, given up in exchange for something else, usually goods or services. Costs are the prices paid for purchasing, processing, and delivery activities involved in turning raw materials into finished products. As a verb, cost means to estimate the amount of money needed to produce a product or perform a service. Example – Cost of machinery, building, etc. It must be noted that all expenses are costs, but not all costs are expenses.<\/p>\n

Classification of Costs<\/strong><\/h4>\n

Classification on the basis of production cost:<\/p>\n