PPT - Cost Concept | Cost Accounting - B Com PDF Download

 Page 1


Cost Concepts
Cost Concepts
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Cost Concepts
Cost Concepts Cost Concept:
Cost Concept:
?
 
 
It is used for analyzing the cost of a 
It is used for analyzing the cost of a 
project in short and long run. 
project in short and long run. 
Page 3


Cost Concepts
Cost Concepts Cost Concept:
Cost Concept:
?
 
 
It is used for analyzing the cost of a 
It is used for analyzing the cost of a 
project in short and long run. 
project in short and long run. 
Types of Cost:
Types of Cost:
?
Total fixed costs (TFC)
Total fixed costs (TFC)
?
Average fixed costs (AFC)
Average fixed costs (AFC)
?
Total variable costs (TVC)
Total variable costs (TVC)
?
Average variable cost (AVC)
Average variable cost (AVC)
?
Total cost (TC)
Total cost (TC)
?
Average total cost (ATC)
Average total cost (ATC)
?
Marginal cost (MC)
Marginal cost (MC)
Page 4


Cost Concepts
Cost Concepts Cost Concept:
Cost Concept:
?
 
 
It is used for analyzing the cost of a 
It is used for analyzing the cost of a 
project in short and long run. 
project in short and long run. 
Types of Cost:
Types of Cost:
?
Total fixed costs (TFC)
Total fixed costs (TFC)
?
Average fixed costs (AFC)
Average fixed costs (AFC)
?
Total variable costs (TVC)
Total variable costs (TVC)
?
Average variable cost (AVC)
Average variable cost (AVC)
?
Total cost (TC)
Total cost (TC)
?
Average total cost (ATC)
Average total cost (ATC)
?
Marginal cost (MC)
Marginal cost (MC)
Fixed Costs(FC)
Fixed Costs(FC)
Fixed Cost denotes the costs which do not 
Fixed Cost denotes the costs which do not 
vary with the level of production. FC is 
vary with the level of production. FC is 
independent of output.
independent of output.
Eg:
Eg:
 
 
Depreciation, Interest Rate, Rent, Taxes 
Depreciation, Interest Rate, Rent, Taxes 
?
Total fixed cost (TFC):
Total fixed cost (TFC):
           
           
All costs associated with the fixed input.
All costs associated with the fixed input.
?
Average fixed cost 
Average fixed cost 
per unit of output:
per unit of output:
  
  
AFC  =  TFC /Output
AFC  =  TFC /Output
Page 5


Cost Concepts
Cost Concepts Cost Concept:
Cost Concept:
?
 
 
It is used for analyzing the cost of a 
It is used for analyzing the cost of a 
project in short and long run. 
project in short and long run. 
Types of Cost:
Types of Cost:
?
Total fixed costs (TFC)
Total fixed costs (TFC)
?
Average fixed costs (AFC)
Average fixed costs (AFC)
?
Total variable costs (TVC)
Total variable costs (TVC)
?
Average variable cost (AVC)
Average variable cost (AVC)
?
Total cost (TC)
Total cost (TC)
?
Average total cost (ATC)
Average total cost (ATC)
?
Marginal cost (MC)
Marginal cost (MC)
Fixed Costs(FC)
Fixed Costs(FC)
Fixed Cost denotes the costs which do not 
Fixed Cost denotes the costs which do not 
vary with the level of production. FC is 
vary with the level of production. FC is 
independent of output.
independent of output.
Eg:
Eg:
 
 
Depreciation, Interest Rate, Rent, Taxes 
Depreciation, Interest Rate, Rent, Taxes 
?
Total fixed cost (TFC):
Total fixed cost (TFC):
           
           
All costs associated with the fixed input.
All costs associated with the fixed input.
?
Average fixed cost 
Average fixed cost 
per unit of output:
per unit of output:
  
  
AFC  =  TFC /Output
AFC  =  TFC /Output
Variable Costs(VC)
Variable Costs(VC)
Variable Costs is the rest of total cost, the part that 
Variable Costs is the rest of total cost, the part that 
varies as you produce more or less. It depends 
varies as you produce more or less. It depends 
on Output.
on Output.
Eg: Increase of output with labour.
Eg: Increase of output with labour.
?
Total variable cost (TVC):
Total variable cost (TVC):
              
              
All costs associated with the variable 
All costs associated with the variable 
input.
input.
?
Average variable cost
Average variable cost
- cost per unit of output:
- cost per unit of output:
                 
                 
AVC  =  TVC/ Output
AVC  =  TVC/ Output