Cost

Meaning:

Cost is the total amount of money spent to produce, buy, or maintain a product, service, or asset. It includes all expenses like materials, labor, and other inputs needed to make something.

Example:

If a company spends ₹500 on materials and ₹200 on labor to make one product, the total cost is ₹700.

How to understand cost:

1. Cost is what a business pays or gives up to get goods or services.
2. It helps businesses know how much money they need to spend to create something.

Importance of Cost:

• It is the basis for setting prices and calculating profits.
• Understanding costs helps businesses manage their money better.