What is the cost object?

The cost object is an item that represents an input that the company needs to create a good or service. Many manufacturing or manufacturing companies have a cost object in their business processes. Each input represents an increase in the cost of the item produced. In order to pay for these inputs, the company must sell the produced goods for at least equal production costs. Prices higher than production costs are provided by a company profit that allows the producer to earn money or expand current business operations. The raw materials include objects such as wood, stone, metal, plastic or other objects. The work is the workforce provided to individuals who decide on the company in return for the service for services. These tangible items usually have fixed costs. For example, raw materials have specific costs for the amount and style of the necessary materials. The work is fixed and variable as a cost object. While individual hourly rates are fixed costs, the company pays more for costs, forThis employs workers in longer hours.

Service companies may also have a specific cargo. Rather than tangible fixed inputs for the production of goods, service companies focus on activities that increase costs - and value - company. Examples of these activities include: renting rooms in the hotel, customer service agents who solve problems for customers, cleaning areas around the equipment or retail services that sell goods to customers who visit the shop. Each of these service activities is a cost object that will have its own costs in this process. The most common way to monitor these costs is to use the cost -based costs, which identifies all activities that will increase the costs of the company.

In order to track costs, the company may decide to set up a department as costsor income center. The cost centers represent a department that only has the costs generated by their activities. Examples of these types of departments include marketing, production or maintenance. Although they provide value, there is no income generation between these areas of the company. Revenue centers have activities and cost activities generating income, such as selling or department of food services at the hotel. Although the company generates revenue, it will have the costs that need to be monitored to ensure that they remain in line with the company's budget.