How do we measure cost?
- Measurement of cost is the first step in the process of control simply because you cannot control unless you measure.
- Measurement of the cost would mean different when applied to different industries.
- The cost has to be measure with respect to the cost center first and then at a broader level with respect to the cost unit.
- The journey towards the aim of determining the cost of a product or service may take various routes.
In short collect all relevant costs in the process of converting raw material into the finished products and accumulate the total cost.
What is Cost Statement and What is Service?
In simple words, to generate any product or service resources are needed to be called inputs. These inputs are use in a process of conversion. The end result is the output which could either be a product or a service.
The resources consume costs while determining the total cost of resources, the cost of all resources used (directly or indirectly) in the process are accumulate.
Relationship between resources & the product or services: –
The process of accumulating costs will differ according to the nature of the business and the activities carried out are to prepare cost sheets.