Role of Costs in Business decisions
Business decisions are generally taken on the basis of money values of the inputs and outputs. The cost production expressed in monetary terms is an important factor in almost all business decisions, especially those pertaining to (a) locating the weak points in production management; (b), minimizing the cost; (c) finding out the optimum level of output; and (d) estimating or projecting the cost of business operations. Besides, the term ‘cost’ has different meanings under different settings and is subject to varying interpretations. It is therefore essential that only relevant concept of costs is used in the business decisions.
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