a simple way to explain

A cost is a monetary value that is assigned to an item or activity. An expense is a cost that has been incurred and is recorded in the accounting records. A cost object is something for which costs can be accumulated and assigned. Direct costs are costs that can be directly traced to the cost object. Indirect costs are costs that cannot be directly traced to the cost object. Prime cost is the cost of the direct materials and direct labor used in a product or process. Conversion cost is the cost of the direct labor and manufacturing overhead used in a product or process. Manufacturing overhead is the cost of all indirect materials, indirect labor, and other indirect costs incurred in manufacturing a product. The cost of goods manufactured is the cost of the direct materials, direct labor, and manufacturing overhead used in the production of a good or service. The cost of goods sold is the cost of the goods that were sold during a period.