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“Selling costs may be defined as costs necessary to persuade a buyer to buy one product rather than another or to pay from one seller rather than another.” Meyers. Assumptions: Basically, the concept of selling cost is based on the following two assumptions: 1. Buyers do not have any perfect knowledge about the different types of product. 2.
After going through this unit, you should be able to: understand some of the cost concepts that are frequently used in the managerial decision making process; differentiate between different cost concepts; distinguish between economic costs and accounting costs.
Accounting and Economic Costs. When a firm starts producing goods, it has to pay the price for the factors employed for the production. These factors include wages to workers employed, prices for the raw materials, fuel and power used, rent for the building he hires, and interest on the money borrowed for doing business, etc.
These two definitions of cost are important for distinguishing between two conceptions of profit, accounting profit, and economic profit. Accounting profit is a cash concept. It means total revenue minus explicit costs—the difference between dollars brought in and dollars paid out.
11 Οκτ 2024 · Revision notes on Revenue, Costs & Profit for the Edexcel IGCSE Business syllabus, written by the Business experts at Save My Exams.
14 Οκτ 2024 · An Introduction to Costing. Businesses can choose how to calculate the costs of manufacturing products. They need to account for both direct costs, such as raw materials, components and direct labour, and indirect costs, including overheads such as rent, rates, selling costs and administration expenses. Two of the most commonly used methods are.
We will see in the following chapters that revenue is a function of the demand for the firm’s products. Total cost is what the firm pays for producing and selling its products. Recall that production involves the firm converting inputs to outputs. Each of those inputs has a cost to the firm.
