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Essay / Research Paper Abstract
This 6 page paper examines the terms cost and benefit in the business context defining what they mean, how they may be interpreted and applied in consideration of creating profit. The paper looks at different ways of accounting or measuring cost and different types of benefit. The bibliography cites 8 sources.
Page Count:
6 pages (~225 words per page)
File: TS14_TEbencost.rtf
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Unformatted sample text from the term paper:
but they may be seen as far more complex in the creation of profit. If we look first at the idea of a cost, this may be seen as
a financial item that appears on the profit and loss or income sheet. However, this is a very restrictive term, and even a dictionary definition is more inclusive. Here one
definition reads "The expenditure of something, such as time or labor, necessary for the attainment of a goal" (Dictinoary.com, 2005). Costs can therefore seen in financial terms, but do not
need to be financial in origin (Elliott and Elliott, 2005). Benefit may be defined as "Something that promotes or enhances well-being; an advantage" or "payment made or an entitlement available
in accordance with a wage agreement, an insurance policy, or a public assistance program" (Dictionary.com, 2005). Here benefit is an advantage that is created, which in terms of profit this
may be classed as a benefit, but it is not limited to financial results, and other benefits may also lead to profit. Looking at costs first if we look
at the financial costs there have been different models used to account for operating costs. The four main methods are overhead absorption costing, marginal or variable costing, standard costing and
activity based costing (ABC). These are all models that can be used to ensure that costs are lower than revenue in order to create a profit.
Overhead absorption costing is also known as total or full costing, has the objective of ensuring that each item produced, cost centre used and process all
will bear a fair share of the incurred overheads of the business. The main aim of using this method is to ensure that the actual overhead costs are recovered, which
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