Difference Between Cost and Expense

In manufacturing accounting, it is important to know the difference between cost and expense. However, in general, these two terms are considered interchangeable. What Is Cost? The amount of cash paid or liability incurred for a commodity or service is referred to as the cost of that item. The commodity or service will obtain sales revenue in the future. In other words, it represents the amount in…

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Cost Accounting Formulas

The following formulas are useful in cost accounting to determine different types of costs. Prime cost = Direct materials consumed + Direct labor Conversion cost = Direct materials + Factory overhead Factory cost = Direct materials + Direct labor + Factory overhead Cost of goods manufactured = Direct materials consumed + Direct labor + Factory overhead + Opening work-in-progress (WIP)- Closing WIP…

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