“A Cost may be defined as a sacrifice or giving up of resources for a particular purpose”. Initially, costs are recorded in elementary form and then they are grouped in different ways to help managers in various ways. Cost objective can be defined as any activity for which a separate measurement of costs is desired.
The managers want to know the cost of something which helps them to take decisions in various areas of operation. The costs are accumulated and grouped in ways to help managers make decisions, such as evaluating the performance of subordinates and sub-units of the organisation, expanding or deleting products or territories, and replacing equipment etc.