What is the meaning of Cost? Concept and Definition of Cost

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Definition, Concept, Meaning, What is Cost


Concepto de Costo

1. Concept of cost

The word cost etymologically comes from the Latin term "costus" and the Greek "kostos" and is the amount that should be give or pay in Exchange for one thing.
In the management of production cost is what should be reversed to make the product, which will then be moved to the price. The higher quality, greater production cost, and therefore the price of the product will also be higher. This last also is compounded benefit that seeks to obtain from the sale, to achieve a profit, which will be given by the difference between the price at which the product is sold and its cost of production. You must also be added to the final price of the product, the cost of marketing, which is the one that allows to enter the merchandise on sale circuit.
There are so-called fixed costs, which are those that invariably occur at a specific time in a specific production. For example, raw, insurance, the amount of the rent or the salaries of stable employees. There are other costs which are called variables, depend on certain circumstances, which are not always the same, for example energy expenditure or use of additional temporary staff.
By extension the idea of cost applies to everything what must be sacrificed for something immaterial or material that meets human needs. So is said not only to the car me cost lots of money, but that for example, "the cost to devote life to work was losing the family", or "the cost of smoking paid for it with life".
Botany calls cost a cingiberacea tropical plant with a root which assigned diuretic, tonic and caminativas properties.

2 Meaning of cost

The cost is a variable of the economic sector which represents the totality of the economic cost of a production, this sum, is the most important is done in the statistics of enterprises, since then of realized this, is established which will be the price of the manufactured product that will be released to the public. The cost represents the investment that is made for the production. In the same way that the goods, services also apply this tool to their accounts, as referred to in the same way, which will be the use of the monetary assets available in the company to perform its functions.
The cost not only comprises the retrieved with the materials available for the manufacture of a product, to them must be added the payment that is made to employees for performing the action of producing (labor), the cost of the machines and tools used to manufacture the product or service, if it is necessary to add to the costs of production, travel expenses and any transfers or travel that must be done for production and not should be outside all understood to the housing Bullrings, specifically the site in which the production of the good or service is performed. The term cost of main function is to see if the implementation of plans around the ideas that are, earnings, which are badges bearing the production, should always be above the cost of production, thus contributing to the development of new initiatives that encourage the growth of the company is profitable.
New products that a company can develop carry a previous field study in the principles of marketing, with these, a comparison of potential costs with potential sales of the same, in this way is also establishing a concordance with the fact of whether or not it is profitable to invest in the production. It is important to always have on hand everything to do with the statistics in a company, to determine what are the prices, costs, profits and investment to have a domain prosperous economy that circulates, preserved and which is being developed for the sake of the capital.

3. Definition and what is cost

The cost or cost is the economic cost that represents the manufacture of a product or a service. In determining the cost of production, you can set the sale price to the public of the goods in question (the retail price is the sum of the cost more the benefit).
The cost of a product consists of the price of raw material, direct labour used in its production price, the price of indirect labour used for the operation of the company and the cost of depreciation of machinery and buildings.
Specialists say that many entrepreneurs tend to set their prices based on the prices of competitors, without before determining if they attain to cover their own costs. For this reason, a lot of business not thrive since they don't get the necessary profitability for its operation. This reflects that the calculation of costs is indispensable for proper corporate management.
The business cost analysis allows you to know what, where, when, how, how and why happened, which enables a better management of the future.
In other words, the cost is the economic effort that should be done to achieve an operational objective (payment of wages, the purchase of materials, the manufacture of a product, obtaining funds for the financing, management company, etc.). When the desired goal is not reached, it is said that a company has losses.