CIMA - Chapter 2.2 - Introduction to costing - The Concept of Cost

Question 1

What is Economic Cost

The Concept of Cost

Answer 1

1. Economic cost refers to the total cost of choosing one action or decision over another.
2. Helps assess the true cost of a decision, including what is sacrificed in terms of alternative opportunities.
3. Focuses on what is sacrificed (costs).

Question 2

What is the Formula for Economic Cost

The Concept of Cost

Answer 2

Economic Cost = Explicit Costs + Implicit Costs

Question 3

What is Economic Value

The Concept of Cost

Answer 3

1. Economic value refers to the worth of a good or service to an individual or business, often measured by the benefit or utility derived from it.
2. It is typically assessed in terms of willingness to pay or the value it adds to an organization.
3. Focuses on what is gained (value).

Question 4

What is the Formula (Simplified) for Economic Value

The Concept of Cost

Answer 4

EconomicValue = Perceived Benefits − Cost of Acquisition

Question 5

What are the Key Differences Between Economic Cost and Economic Value

Answer 5

Question 6

what is the Relationship Between Economic Cost and Economic Value

Answer 6