Concept in Definition ABC

The cost, also called cost, is that economic expense that involves the manufacture of a product or the provision of a service. Once the production cost has been determined, for example, the sale price to the consumer public of the product or service in question can be determined. While, the public price will be the sum of the cost plus the profit sought.

The cost of a product will in turn be made up of different prices such as: price of the raw materialthat is used to produce it, the direct labor price that will be involved in the production, the indirect labor price that needs to be used for the functioning of the company and finally the cost of amortization machinery and building involved in production.

It should be noted that the calculation of expenses will be of vital importance when it comes to the success of the business management or commercial.
Unfortunately, it turns out to be commonplace for entrepreneurs to establish their own sales prices based on the prices proposed by their

competence direct, without first making sure that they are enough to cover their own costs, then, a quite usual situation based on this scenario is that those businesses raised in this way, incorrect by the way, do not prosper because they will never obtain the cost effectiveness necessary to prosper and stay in the chosen field.

Analyze costs is an activity that will mark the successful future of any administration, since through their analysis it will be possible to know the what, where, when, in what, how and why of everything that in economic matters happens in a business.

In short, the cost is the equivalent of Economic effort invested with the mission of achieving an operational objective, the payment of salaries, the purchase of raw material, the achievement of investments, the administration, among others. When the company or the business fails to reach that goal, it will be possible to talk about losses and from there analyze new variables to overcome the situation, if this is still possible.

Cost Topics