What is the cost concept in economics?
In a basic economic sense, cost is the measure of the alternative opportunities foregone in the choice of one good or activity over others. This fundamental cost is usually referred to as opportunity cost.
What is cost in economics Slideshare?
It is the total expenditure incurred by a firm on the factor of production required for the production of a commodity • TC = TVC + TFC • TC = AC * OUTPUT • TC = 𝑀𝐶 + 𝑇𝐹𝐶 7. It refers to per unit of total fixed cost. • AFC = TFC / OUTPUT • AFC = AC – AVC.
What are the five cost concepts?
Besides the concept of opportunity cost, there are several other concepts of cost namely fixed costs, explicit costs, social costs, implicit costs, social costs, and replacement costs.
What is cost concept and classification?
It is the value the goods or services expended to obtain current or future benefits. Costs can be classified in different ways. There are manufacturing costs and non-manufacturing costs, direct and indirect costs, product and period costs, controllable and uncontrollable costs, fixed and variable, etc.
What is the importance of cost concept?
Controlling costs: Cost accounting helps the management foresee the cost price and selling price of a product or a service, which helps them formulate business policies. With cost value as a reference, the management can come up with techniques to control costs with an aim to achieve maximum profitability.
Why do we use cost concept?
Benefits of Cost Principle Concept This concept helps your balance sheet to be consistent. Historical cost principle helps to maintain consistency between each financial period. It becomes more practical when sharing with third parties, like lenders and investors. You can use the cost principle concept to verify costs.
What are the cost concepts in project management?
1. Cost Concepts. 2. Cost Concept: It is used for analyzing the cost of a project in short and long run. 3. Types of Cost: Total fixed costs (TFC) Average fixed costs (AFC) Total variable costs (TVC) Average variable cost (AVC) Total cost (TC) Average total cost (ATC) Marginal cost (MC)
What are cost concepts in micro economics?
detailed explanation of cost concepts in micro economics…. Chapter 11 cost methods, techniques of cost accounting and classification o… 1. Cost Concepts 2. Cost Concept: It is used for analyzing the cost of a project in short and long run. 3.
What are economies of scale and diseconomies?
Economies of Scale: Economies of scale are the cost advantages that a firm obtains due to expansion. Diseconomies is the opposite. Two types: 1. Pecuniary Economies of Scale: Paying low prices because of buying in large Quantity.