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Cost and Costing Techniques in Managerial Economics


Affiliations
1 MBA Department, BNM Institute of Technology, Bengaluru 560070, India
 

Cost, price and profit constitute building blocks of costing and pricing process. Accordingly various costing techniques have been devised and adopted for industrial applications. Cost-volume-profit analysis involves the study of revenues and costs of a firm in relation to its volume of sales. Similarly, firms develop an understanding of cost-volume-price-profit abbreviated as “CVPP analysis by supplementary and additional dimension namely ‘price’.

This analysis mainly deals with cost-output relationship. Cost calculation precedes price fixation and it is based on composition of cost of product and service. The businessman is interested in the cost that will be incurred in producing a product. Customers do not decide to buy a commodity without having some idea of its making-up of or characteristics. This article highlights different costs for different purposes. It does not cover entire gamut of costs and cost accounting, but uses underlying cost concepts and costing techniques by managerial economists or business managers.


Keywords

Prime Cost, Fixed Cost, Variables Cost, Marginal Cost, Overhead Cost, Cost Unit.
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  • Cost and Costing Techniques in Managerial Economics

Abstract Views: 183  |  PDF Views: 83

Authors

V. Basavachari
MBA Department, BNM Institute of Technology, Bengaluru 560070, India

Abstract


Cost, price and profit constitute building blocks of costing and pricing process. Accordingly various costing techniques have been devised and adopted for industrial applications. Cost-volume-profit analysis involves the study of revenues and costs of a firm in relation to its volume of sales. Similarly, firms develop an understanding of cost-volume-price-profit abbreviated as “CVPP analysis by supplementary and additional dimension namely ‘price’.

This analysis mainly deals with cost-output relationship. Cost calculation precedes price fixation and it is based on composition of cost of product and service. The businessman is interested in the cost that will be incurred in producing a product. Customers do not decide to buy a commodity without having some idea of its making-up of or characteristics. This article highlights different costs for different purposes. It does not cover entire gamut of costs and cost accounting, but uses underlying cost concepts and costing techniques by managerial economists or business managers.


Keywords


Prime Cost, Fixed Cost, Variables Cost, Marginal Cost, Overhead Cost, Cost Unit.

References