A cost object is a term used primarily in
cost accounting
Cost accounting is defined as "a systematic set of procedures for recording and reporting measurements of the cost of manufacturing goods and performing services in the aggregate and in detail. It includes methods for recognizing, classifying, al ...
to describe something to which
costs
In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which ...
are assigned. Common examples of cost objects are: product lines, geographic territories, customers, departments or anything else for which management would like to quantify cost.
Cost object is anything for which a separate measurement of cost is required. Cost object may be a product, a service, a project, etc.
The use of cost objects is common within
activity based costing
Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. Therefore, this model assigns more ind ...
and
Grenzplankostenrechnung
Grenzplankostenrechnung (GPK) is a German costing methodology, developed in the late 1940s and 1950s, designed to provide a consistent and accurate application of how managerial costs are calculated and assigned to a product or service. The term Gr ...
systems.
See also
Cost centre (business)
A cost centre is a department within a business to which costs can be allocated. The term includes departments which do not produce directly but incur costs to the business, when the manager and employees of the cost centre are not accountable for ...
References
Costs
Management accounting
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