Depreciation cost to be included in cost of a product?

Dear Raj,
I assume you are asking in context to valuation of a product cost. In order to know the cost incurred by us for the product, we need to consider both direct and indirect costs. Direct costs are those which are directly attributable to the manufacturing of the product. But while preparing the product, we have also incurred other costs without which the product cannot be produced. eg. Factory if running in a rented place, then without the payment of rent, you won't be able to produce the product. Similarly, without using the machines, you cannot produce the product. These machines undergo wear and tear while being used. Hence in order to calculate the correct value of the product, the wear and tear cost incurred by the machine for the manufacturing of the product is to be considered I.E. Deprecation.

Dear Sir,

 

Thank you for your valuable comments.

 

Regards

Raj