Cost Concepts Introduction The termcost doest not have a definite meaning and its scope is extremely broad

and general,It is therefore, not easy to define or explain this tem without leaving any doubt concerning its meaning.Cost accountatnts ,economist and others develop yhe concept of cost to according to their needs because one complete description of cost to suit all situations is not possible Meaning of cost Cost can be defined as the value attributed to resources.There are three resources of a cost ,i.e material,labour and services for a manufacturing organizations.Cost is the amount of expenditure incurred on a given thing.The comitee on cost concepts and standars of American Accounting Associations has definrd Cost is the Fore gong Measured in monetary terms incurred or potentially to be incurred to achieve a specific objective.The term cost connotes different meaning to different people.But in cost accounting it is used in a special sense.It is the amount of resources given up in exchange for some goods and services.The resources given up are expressed in monetary tems.Cost is defined as the amount of expenditure incurred on or attribute to a given thing or to ascertain the cost of a given thing. Thus the cost is that which is given or is sacarifised to obtain some thing.The cost of an article consists of actual outgoings or ascertained charges incurred in its production and sale.Cost is a generic term and it is always advisible to qualify the word cost to show exactly what it means,i.e, to use adjectives with cost t o be more clear and precise.E.g:prime cost,factory cost,sunt cost etc.Cost is also different from values as cost is measured in terms of money whereas value is measured in terms of usefulness or utility of an article. The objective for which the cost is computed is also important.Foer example,if the purpose is to fix the selling price,Then the total cost is considered.For valuvation of stock cost means only cost of production.Thus the term cost has different interpretations. A cost is must always be studied with reference to its purpose and conditions.different costs may be ascertained for different puppose na d under different conditions .Fo rthe valuvation of workin progress,factory cost is used but for valuvation of finisfed goods.if the puppose of study of cost is te same different conditions may lead in variation cost.The cost per unit of a produt changes with increase or decrease in volume of output as the amount of fixed expenses to be brone by each unit of output increase or decrease with increase or decrease in unit of production. It is to be noted carefully that there is no such thing as an exact cost or true cost as no figure of cost is true in all circumstances and for all purposes.True cost can be only upto the stages of prime cost.But as soon as overheads are included in total cost estimated basis,the total cost becomes estimated cost which can be used to obtain a resaonale dgree of accuracy. Expenses. Expenses are costs which have been applied against revenue of particular accounting period in accordance with the principle of matching cost to revenue e.g cost of goods sold,office salaries of the period in which they are incurred.

Loss.It represents dimiunation in ownership euity other than from withdrawl of a capital for which no compensating value has been received e.g destruction of prpperty by fire. Thus the central idea of the cost concept is that of giving up,parting with or sacrificing something or value to accuire some other thing or value;expense refer to that portion of such scarifieses which are assigned to a particular accounting period.Loss denotes sacrifice for which there is no corresponding return whereas cost implies sacrifies for the sake of, and accompined by the securing of some other value.