A cost object is any item or activity for which a business is measuring costs. It could be a product, service, project, department, or any other identifiable entity for which cost data is being collected and analyzed. The purpose of identifying cost objects is to allocate costs accurately so that the business can make informed decisions about pricing, budgeting, and profitability.
A cost object refers to any item, product, or activity for which a separate measurement of costs is desired. It can be a physical or conceptual entity that incurs costs and for which management wants to track or assign those costs. The cost object can be a project, a department within a company, a specific product, a customer, or any other unit of analysis. It helps in understanding and allocating costs accurately, enabling effective decision-making and cost control.
