Basic economic terms are useful for everyone. But there are so many of them, and the differences in meanings are often difficult to understand! For example, how does the cost estimate differ from the cost price? These concepts are closely related to each other, but can we talk about their identity?
Costing is the process of calculating the monetary costs required to produce one unit of product or group of goods. The result of such calculations is the cost price, which can be used to estimate costs, set plans, the price of a product, etc.
Cost is the total monetary value of various types of resources used to produce a unit of output or product group. It may include: raw materials, materials, energy, remuneration of employees of the enterprise and the costs of services of attracted companies, coverage of depreciation of fixed assets, etc.
Already from the definitions the main thing is obvious and in fact the only difference between costing and cost. It consists in the fact that the first term is used to denote the calculation process itself, and the second is the name of the result of this calculation.
In general, both concepts are inextricably linked. So, there are several types of cost, each of which is formed taking into account all cost items or a certain part of them. Such calculations are used to estimate costs in different parts of the production process and make management decisions to optimize them, change pricing policies, apply organizational and technical innovations, etc.
If you could not understand the difference between calculation and cost, now their relationship is obvious, but not their identity. [twenty].