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Managerial accounting A cost must always be studied in relation to its purpose and conditions. Different costs may be ascertained for different purposes and under

Managerial accounting A cost must always be studied in relation to its purpose and conditions. Different costs may be ascertained for different purposes and under different conditions. Work-in-progress is valued at factory cost, while stock of finished goods may be valued at cost of production. Even if the purpose of the study of cost is the same, different conditions may lead to variation in cost. The cost per unit of a product is sure to vary with an increase in the volume of output since the amount of fixed expenses to be borne by each unit of output decreases.

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