Cost is "a foregoing, measured in monetary terms, incurred or potentially to be incurred to achieve a specific objective" (American Accounting Association).
Cost refers the monetary measure of the amount of resources given up or used for some specified purpose. 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.
Management accountants need to understand cost concepts because they are vital in many areas of planning, control, and decision-making. In this unit, we will learn about the different types of costs and product costing systems.