Question

What is the cost per unit used to value? On what financial statements do these amounts get reported?

Answer 1

Solution. An organization operating business needs to incur costs in order to deliver goods and services to customers in order to meet the primary objective of profit making. This cost encompasses fixed and variable expenses per unit to produce the total amount during an accounting period. This facilitates budget process to control activities to meet objectives effectively and efficiently.

Costs are accounted and reported under established rules and regulations to facilitate preparation of financial statements to reflect true financial position for both internal and external users. They are reflected on organization's Income Statement to determine Gross Profit along with Net Income and indirectly represented on Balance Sheet as assets are affected and expenses are shown under liabilities at the end of an accounting period. Financial statement reporting and social accounting are important for an organization to sustain in today's global competitive market.