Kostnaður

Kostnaður is the Icelandic term for cost or expense. In economics and accounting, it denotes the monetary value of resources consumed to produce goods or deliver services. The concept encompasses both accounting cost—the amount recorded in financial statements—and economic cost, which includes opportunity costs, the value of the next-best alternative foregone. In everyday language, kostnaður covers all outlays tied to a purchase or production.

Costs can be categorized by behavior and relevance. Fixed costs remain the same within a given production range, while variable costs vary with output. Other key distinctions include marginal cost, the cost of producing one additional unit, and average cost. Sunk cost refers to a cost that cannot be recovered. Direct costs are those tied directly to production, such as materials and labor, while indirect costs or overhead are not directly traceable to a single product or service.

In business and public policy, kostnaður informs pricing, budgeting, profitability analysis and investment decisions. An understanding of cost structure helps determine the breakeven point, supports cost-control strategies, and guides resource allocation. The concept is foundational in economics, management accounting and financial decision-making.