Question

Explain the urgent cost.

Answer 1

Urgent cost refers to the expenses that must be paid immediately to ensure the smooth and uninterrupted functioning of a business. These are time-sensitive and cannot be postponed without affecting operations or incurring penalties.

Examples of urgent costs include: 

• Wages and salaries due to employees
• Payment for critical raw materials
• Utility bills (electricity, water, internet)
• Interest payments on loans
• Repair costs for essential machinery

Failure to meet urgent costs can disrupt production, damage business reputation, or lead to legal issues. Hence, they are given top priority in a firm’s financial planning.