Cost Unit and Cost Centre A) Cost Unit: The cost unit is defined as the unit of product, service, time, activity, or combination in relation to which cost is estimated. At the time of preparing the cost statements and accounts, a particular unit is required to be selected. It helps to identify the cost accurately and allocate the various expenses. It assists the cost measurement process of the company and promotes comparison. Cost Unit Example- The cost unit of the hotel industry is a room and the cost unit of the steel industry would be a ton. This is preceded by the cost centre. There are both simple units and complex units in cost units. 1. Simple/Single Cost Unit: A simple unit represents a single standard measurement like per kilogram, per piece, per metre, etc. 2. Composite/Complex Cost Unit: Complex unit uses a combination of two simple units like per kilowatt-hour, per tonne-kilometre, etc. Characteristics ...
Sanjivani University, Kopargaon.