CHAPTER 2

Cost Concepts and Methods

About This Chapter

In this chapter, we address the question raised in Chapter 1: “What did it cost?” As observed in the previous chapter, “cost” is a slippery term. You will find that the more precisely you identify the cost you are interested in, the more useful will be the information for analysis. You may be seeking the cost of materials used in the production for a certain period of time, the cost of conducting a laser surgery operation, the cost of making a part of a product compared to buying in, or the cost of being the defense team in a major fraud trial.

This range of activities leads us to the question of what is being “costed.” In other words, you want to know the cost of conducting the laser operation ...

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