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What and how to relate to costs

What and how to relate to costs

The costs for the production and sale of goods represent the sum of the cost of certain factors such as materials, fixed assets, raw materials, fuel, labor, etc.

Costs are usually expressed in the form of money.



Total costs - is the amount of cashcompanies spent on production. To calculate it, add fixed and variable costs of the company. To calculate the average costs for a certain period, divide the total costs by the number of released product.


Imputed or economic costs areindicator of the economic costs incurred by the company. These expenses include the organization acquired the resources of its internal resources, as well as profit. There are also accounting costs implies a cost, which are carried out by the company for the acquisition of these or other factors of production. Accounting costs may not exceed the economic, since only take into account the real costs, aimed at the acquisition of the necessary resources from external suppliers, which is a legal registration and the fact is the basis for guidance in accounting.


Accounting costs are divided into direct andindirect. Direct costs include spent only on production. Indirect costs include all costs that are necessary for the enterprise to its normal functioning: overheads, depreciation, interest payments to banks, etc.


Another group are the alternativecosts, which are funds aimed at the production of additional goods and the provision of specialized services that are not the main focus of the company. Alternative cost is accepted to any third-party costs or future costs on the basis of financial analysis and the production plan. To determine the opportunity costs must be subtracted from the cost accounting of economic costs.

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