The cost of items can be classified into Internal Cost and External Cost. External Cost refers to the total cost required for processing and purchasing the constituent items of the item. For example, as shown in the figure, the External Cost of Product X is the total of each Internal Cost of Item a, b, "イ", while the External Cost of Item a is the cost of Material "イ". By adding the Internal Cost to the External Cost of an item, the item's Accumulated Cost is calculated, which is used in standard costing by product.


Antonyms: Internal Cost