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What is the difference between cost and price?

Some people use cost and price interchangeably. Others use the term cost to mean one component of a product's selling price. Even the same person might use the terms differently.

For example, in standard costing the price variance of the raw materials refers to the difference between the standard cost and the actual cost of the materials.

In other situations we define a product's selling price as: product costs + expenses + profit.

As these two examples indicate, there can be different meanings for the terms cost and price.