Microlesson · 5-min read

Research and Development Cost

# Research & Development (R&D) Cost

## Definition

R&D Cost means the cost incurred for improvement of current process, product, or service.

## Key Points

## Position in Cost Sheet

Added after Net Factory Cost along with Quality Control Cost and production-related Admin OH.

Worked example

### Example 1

Example: Net Factory Cost = ₹10,00,000. R&D cost for improving existing process = ₹40,000. QC Cost = ₹30,000. Primary Packaging = ₹20,000.

Cost of Production = 10,00,000 + 40,000 + 30,000 + 20,000 = ₹10,90,000

Confusing R&D for current process improvement with cost of developing entirely new products (latter is capitalised).
Trying to compute R&D from sub-items — it is always given.

Reference:

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