What is a Cost?

A cost is any monetary amount that has to be paid by the business in order to achieve or produce something of value.

For business, cost is calculated as a monetary value for the following:

• resources

• materials

• effort

• risks incurred

• opportunities lost in the production or delivery of a good or service

In accounting, on the other hands, costs are usually related to:

• supplies

• services

• labor

• products

• equipment, etc.

The cost is the amount denoted on invoices as the price, and it is then recorded in bookkeeping as an expense.

In business, the break-even point is when the revenues received equal the costs, and therefore no profit has been made. In order to have profit, or increase profits, a business must ensure that its costs are less than its revenues.