Cost estimating may be defined as
| Cost estimating may be defined as
A. the process of forecasting the expenses that must be incurred to manufacture a product.
B. the process of determination of an actual cost of a product after adding different expenses incurred in various departments
C. the process of comparing actual cost with predicted cost.
D. the process of reducing the cost.
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Right Answer is: A
SOLUTION
Concept:
- Cost estimation may be defined as the process of forecasting the expenses that must be incurred to manufacture a product.
- These expenses take into consideration all expenditures involved in design and manufacture with all the related service facilities such as pattern making, tool making as well as a portion of the general administrative and selling costs.
- Cost estimates are the joint product of the engineer and the cost accountant.
- Estimating is the calculation of the costs which are expected to be incurred in manufacturing a component in advance before the component is actually manufactured.
- Costing may be defined as a system of accountants which systematically and accurately records every expenditure in order to determine the cost of a product after knowing the different expenses incurred in various departments.