Important and Various Concepts of Cost

The concept of cost is differently used by different people depending upon the purpose for which they are used. An accountant is always interested in recording the actual cost for determining the business result. An economist is interested in making the use of those cost concepts which help in decision making. Thus, the concepts of cost in each are different. This is briefly explained below. Fixed and variable cost Fixed costs are those costs which remain fixed irrespective of the quantity of output produced by a business firm. Cost of…

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Need for Demand Forecasting

Business managers have to make plans for future levels of production. It is required to make necessary arrangements for the purchase of raw materials, recruiting and training the required skilled labor and for arranging the required funds for production etc. forecasting demand means estimation of future demand. Good forecast of future demand is a necessary pre-condition for proper planning of future level of production. The need for demand forecasting is briefly explained below. It is on the basis of production plans firms make necessary arrangements for the purchase of raw…

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