AAT Elements of Costing: Purpose of Costing

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  • Purpose of Costing
    • Cost systems help to provide answers to questions such as 'What does it cost us to make a pair of trainers?' 'What does it cost us to serve a cheeseburger and fries?'
    • Used by both manufacturing businesses and businesses provising services
    • Help with decision making, planning and control of expenses
    • Know revenue from sales
    • Know the cost of a firm's output
    • Working out the cost of a product or service helps to:
      • Determine a selling price
      • Value Inventory
      • Provide information for financial statements
      • Make management decisions (i.e. how many items should be made & sold)


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