Definition of Tangible Cost

Tangible costs typically include things a company can buy and measure directly for specific costs, such as labor, materials and space.

Explanation of Tangible Cost

Tangible costs are the payments a company makes for, such as; salaries, leases, operational expenses, employee medical benefits, transportation etc. These costs are reflected in general ledger. Tangible costs are essential to run a business and produce quality products. These costs can be measured and are easily quantifiable.

The sources of tangible costs are documented with receipts, contracts or policies. The accounting department assigns tangible costs to specific cost categories, such as the cost of goods sold or overhead costs. Some tangible costs produce obvious benefits, such as the production of the company’s product. Others, such as safety training or environmental controls, may produce benefits that are less easily measured, but the costs themselves are concrete in the sense that they come straight out of the company’s bottom line.