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