"Expensive" redirects here. For the song by Ty Dolla Sign featuring Nicki Minaj, see Expensive (song).
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost. In this case, money is the input that is gone in order to acquire the thing. This acquisition cost may be the sum of the cost of production as incurred by the original producer, and further costs of transaction as incurred by the acquirer over and above the price paid to the producer. Usually, the price also includes a mark-up for profit over the cost of production.
More generalized in the field of economics, cost is a metric that is totaling up as a result of a process or as a differential for the result of a decision.[1] Hence cost is the metric used in the standard modelingparadigm applied to economic processes.
Costs (pl.) are often further described based on their timing or their applicability.
In accounting, costs are the monetary value of expenditures for supplies, services, labor, products, equipment and other items purchased for use by a business or other accounting entity. It is the amount denoted on invoices as the price and recorded in book keeping records as an expense or asset cost basis.
Opportunity cost, also referred to as economic cost is the value of the best alternative that was not chosen in order to pursue the current endeavor—i.e., what could have been accomplished with the resources expended in the undertaking. It represents opportunities forgone.
In theoretical economics, cost used without qualification often means opportunity cost.[2]
When a transaction takes place, it typically involves both private costs and external costs.
Private costs are the costs that the buyer of a good or service pays the seller. This can also be described as the costs internal to the firm's production function.
External costs (also called externalities), in contrast, are the costs that people other than the buyer are forced to pay as a result of the transaction. The bearers of such costs can be either particular individuals or society at large. Note that external costs are often both non-monetary and problematic to quantify for comparison with monetary values. They include things like pollution, things that society will likely have to pay for in some way or at some time in the future, even so that are not included in transaction prices.
Social costs are the sum of private costs and external costs.
For example, the manufacturing cost of a car (i.e., the costs of buying inputs, land tax rates for the car plant, overhead costs of running the plant and labor costs) reflects the private cost for the manufacturer (in some ways, normal profit can also be seen as a cost of production; see, e.g., Ison and Wall, 2007, p. 181). The polluted waters or polluted air also created as part of the process of producing the car is an external cost borne by those who are affected by the pollution or who value unpolluted air or water. Because the manufacturer does not pay for this external cost (the cost of emitting undesirable waste into the commons), and does not include this cost in the price of the car (a Kaldor-Hicks compensation), they are said to be external to the market pricing mechanism. The air pollution from driving the car is also an externality produced by the car user in the process of using his good. The driver does not compensate for the environmental damage caused by using the car.
When developing a business plan for a new or existing company, product or project, planners typically make cost estimates in order to assess whether revenues/benefits will cover costs (see cost-benefit analysis). This is done in both business and government. Costs are often underestimated, resulting in cost overrun during execution.
Cost-plus pricing is where the price equals cost plus a percentage of overhead or profit margin. In business economics, the profitability of a trade or sales prospect relies on the ability of an enterprise to sustain market prices that cover all costs and leave a surplus for owner interest, as expressed by:
Manufacturing costs are those costs that are directly involved in manufacturing of products. Examples of manufacturing costs include raw materials costs and charges related to workers. Manufacturing cost is divided into three broad categories:
Non-manufacturing costs are those costs that are not directly incurred in manufacturing a product. Examples of such costs are salary of sales personnel and advertising expenses. Generally, non-manufacturing costs are further classified into two categories:
A defensive cost is an environmental expenditure to eliminate or prevent environmental damage. Defensive costs form part of the genuine progress indicator (GPI) calculations.
Labour costs would include travel time, holiday pay, training costs, working clothes, social insurance, taxes on employment &c.
Path cost is a term in networking to define the worthiness of a path, see Routing.
^O'Sullivan, Arthur; Sheffrin, Steven M. (2003). Economics: Principles in Action. Upper Saddle River, New Jersey 07458: Pearson Prentice Hall. p. 16. ISBN0-13-063085-3.{{cite book}}: CS1 maint: location (link)
^"Revenue vs. Profit: What's the Difference?". Investopedia.
Further reading
Wikimedia Commons has media related to Costs.
Look up cost or time-consuming in Wiktionary, the free dictionary.
William Baumol (1968), Entrepreneurship in Economic Theory. American Economic Review, Papers and Proceedings.
Stephen Ison and Stuart Wall (2007), Economics, 4th Edition, Harlow, England; New York: FT Prentice Hall.
Israel Kirzner (1979), Perception, Opportunity and Profit, Chicago: University of Chicago Press.
August 19, 2023
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For other uses see Cost disambiguation Expensive redirects here For the song by Ty Dolla Sign featuring Nicki Minaj see Expensive song In production research retail and accounting a cost is the value of money that has been used up to produce something or deliver a service and hence is not available for use anymore In business the cost may be one of acquisition in which case the amount of money expended to acquire it is counted as cost In this case money is the input that is gone in order to acquire the thing This acquisition cost may be the sum of the cost of production as incurred by the original producer and further costs of transaction as incurred by the acquirer over and above the price paid to the producer Usually the price also includes a mark up for profit over the cost of production More generalized in the field of economics cost is a metric that is totaling up as a result of a process or as a differential for the result of a decision 1 Hence cost is the metric used in the standard modeling paradigm applied to economic processes Costs pl are often further described based on their timing or their applicability Contents 1 Types of accounting costs 2 Comparing private external and social costs 3 Cost estimation 4 Manufacturing costs vs non manufacturing costs 5 Other costs 6 See also 7 Notes 8 References 9 Further readingTypes of accounting costs EditMain articles accounting cost opportunity cost historical cost marginal cost sunk cost and standard cost accounting In accounting costs are the monetary value of expenditures for supplies services labor products equipment and other items purchased for use by a business or other accounting entity It is the amount denoted on invoices as the price and recorded in book keeping records as an expense or asset cost basis Opportunity cost also referred to as economic cost is the value of the best alternative that was not chosen in order to pursue the current endeavor i e what could have been accomplished with the resources expended in the undertaking It represents opportunities forgone In theoretical economics cost used without qualification often means opportunity cost 2 Comparing private external and social costs EditMain articles Externality and social cost This section does not cite any sources Please help improve this section by adding citations to reliable sources Unsourced material may be challenged and removed June 2023 Learn how and when to remove this template message When a transaction takes place it typically involves both private costs and external costs Private costs are the costs that the buyer of a good or service pays the seller This can also be described as the costs internal to the firm s production function External costs also called externalities in contrast are the costs that people other than the buyer are forced to pay as a result of the transaction The bearers of such costs can be either particular individuals or society at large Note that external costs are often both non monetary and problematic to quantify for comparison with monetary values They include things like pollution things that society will likely have to pay for in some way or at some time in the future even so that are not included in transaction prices Social costs are the sum of private costs and external costs For example the manufacturing cost of a car i e the costs of buying inputs land tax rates for the car plant overhead costs of running the plant and labor costs reflects the private cost for the manufacturer in some ways normal profit can also be seen as a cost of production see e g Ison and Wall 2007 p 181 The polluted waters or polluted air also created as part of the process of producing the car is an external cost borne by those who are affected by the pollution or who value unpolluted air or water Because the manufacturer does not pay for this external cost the cost of emitting undesirable waste into the commons and does not include this cost in the price of the car a Kaldor Hicks compensation they are said to be external to the market pricing mechanism The air pollution from driving the car is also an externality produced by the car user in the process of using his good The driver does not compensate for the environmental damage caused by using the car Cost estimation EditMain articles Cost estimation Cost overrun and parametric estimating When developing a business plan for a new or existing company product or project planners typically make cost estimates in order to assess whether revenues benefits will cover costs see cost benefit analysis This is done in both business and government Costs are often underestimated resulting in cost overrun during execution Cost plus pricing is where the price equals cost plus a percentage of overhead or profit margin In business economics the profitability of a trade or sales prospect relies on the ability of an enterprise to sustain market prices that cover all costs and leave a surplus for owner interest as expressed by Profit Revenues Costs displaystyle text Profit Revenues Costs a Manufacturing costs vs non manufacturing costs EditThis section does not cite any sources Please help improve this section by adding citations to reliable sources Unsourced material may be challenged and removed June 2023 Learn how and when to remove this template message Manufacturing costs are those costs that are directly involved in manufacturing of products Examples of manufacturing costs include raw materials costs and charges related to workers Manufacturing cost is divided into three broad categories Direct materials cost Direct labor cost Manufacturing overhead cost Non manufacturing costs are those costs that are not directly incurred in manufacturing a product Examples of such costs are salary of sales personnel and advertising expenses Generally non manufacturing costs are further classified into two categories Selling and distribution costs Administrative costs Other costs EditThis section does not cite any sources Please help improve this section by adding citations to reliable sources Unsourced material may be challenged and removed June 2023 Learn how and when to remove this template message A defensive cost is an environmental expenditure to eliminate or prevent environmental damage Defensive costs form part of the genuine progress indicator GPI calculations Labour costs would include travel time holiday pay training costs working clothes social insurance taxes on employment amp c Path cost is a term in networking to define the worthiness of a path see Routing See also EditAverage cost Cost accounting Cost curve Cost object Direct cost Fixed cost Incremental cost Indirect cost Life cycle cost Outline of industrial organization Repugnancy costs Semi variable cost Total cost Variable costNotes Edit Gross profit is revenue minus the cost of goods sold 3 References Edit O Sullivan Arthur Sheffrin Steven M 2003 Economics Principles in Action Upper Saddle River New Jersey 07458 Pearson Prentice Hall p 16 ISBN 0 13 063085 3 a href Template Cite book html title Template Cite book cite book a CS1 maint location link CCP Exam Dumps Retrieved 1 March 2018 Revenue vs Profit What s the Difference Investopedia Further reading Edit Wikimedia Commons has media related to Costs Look up cost or time consuming in Wiktionary the free dictionary William Baumol 1968 Entrepreneurship in Economic Theory American Economic Review Papers and Proceedings Stephen Ison and Stuart Wall 2007 Economics 4th Edition Harlow England New York FT Prentice Hall Israel Kirzner 1979 Perception Opportunity and Profit Chicago University of Chicago Press Retrieved from https en wikipedia org w index php title Cost amp oldid 1169396641, wikipedia, wiki, book, books, library,
