## Cost Objects and Cost Units
### Cost Object
Definition: Anything for which a separate measurement of cost is required.
| Type | Examples |
|---|---|
| Product | Smartphone, SUV Car, Book |
| Service | Airline flight (Delhi–Mumbai), Concurrent audit assignment |
| Project | Metro Rail project, Road projects |
| Activity | Quality inspection, Placing purchase orders |
| Process | Crude oil refining, Melting of billets in rolling mills |
| Department | Production dept., Finance & Accounts, Safety |
### Cost Unit
Definition: A unit of product, service, or time (or combination) in relation to which costs are ascertained or expressed. Usually a unit of physical measurement — number, weight, area, volume, length, time, or value.
#### Industry Examples
| Industry / Product | Cost Unit |
|---|---|
| Automobile | Number |
| Cement | Ton / per bag |
| Chemicals | Litre, kg, ton |
| Power | Kilowatt-hour (kWh) |
| Steel | Ton |
| Transport | Passenger-kilometre |
| Gas | Cubic feet |
| Brewing | Barrel |
| Brick-making | 1,000 bricks |
| Coal mining | Tonne/ton |
| Oil | Barrel, tonne, litre |
| Hotel/Catering | Room / meal |
| Professional services | Chargeable hour, job, contract |
| Education | Course, enrolled student, successful student |
| Hospitals | Patient day |
#### Activity-Level Cost Units
| Activity | Cost Unit |
|---|---|
| Credit control | Accounts maintained |
| Selling | Customer call, orders taken |
| Materials storage | Requisition unit issued/received |
| Personnel administration | Personnel record |
### Distinction
- Cost object answers "what are we measuring cost for?" (the entity)
- Cost unit answers "in what unit do we express that cost?" (the measure)