A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a brand category, an activity and a department.
Manufacturing departments are either considered as cost pools of cost objects, depending upon whether management’s focus is on costs for the products or for the manufacturing departments.
The concept of cost objects is wider. It also includes a group of products, services, departments, customers and suppliers and so on. Any item, to which cost can be traced and that has a key role in the management strategy can be treated as a cost object.