Outlay Cost

Outlay cost can be defined as the concrete cost related to the business that remains constant and can be defined at any time such as past, present and future. It is very easy to identify and define outlay costs because these are the concrete costs and they are actually being occurred within the business or the company. For a business corporation the example of an outlay cost of a new project that is launched can be the start up cost of the business, the hiring cost and the ultimate production cost. For a project that is already running and is the part of the business operations the outlay cost can be rent of the production unit, office or building, salaries of the employees, equipment that are being used and the costs that are required for maintenance. Another name given to the outlay costs are the explicit costs.

There are different ways of recording outlay costs such as in cost accounting outlay costs are immediately deducted as a result they immediately reduce the earnings. On the other hand in accrual accounting the outlay costs are spanned and split over all the accounting periods to which these costs belong and are considered as expenses of various periods that are matched to the related revenues. A number of benefits and forgone profits that comes under the heading of hidden or the opportunity costs are not included in the outlay costs. However these hidden or opportunity costs play a very vital role in the overall profitability of the business.



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