Research cost is the cost of searching for new

Research cost is the cost of searching for new and improved products, new application of materials, or new or improved method. It can be carried out by the research staff of organization or it may be entrusted to an outside association or consultants. Such cost include the cost of initial experimentation, all types of tests and subsequent small trial run in order to prove the results of research. The main item of expenditure are salaries and wages of the research and testing staff, materials and facilities used in laboratory and research departments and payment of outside research agencies.

Research may be two types :

• Pure or basic or fundamental research
• Applied or directed research

Pure or basic or fundamental research – This is done to increase the knowledge in certain fields such as production, marketing etc. such research is done in the hope that some useful applications will develop from it. This type of research is usually undertaken by large companies, the government and educational institutions as it has a less certain and immediate benefit. Pure research may be general research or routine research. General research is for general purposes and is not connected with any specific product. The benefit of such research cannot be assessed against a particular product. Routine research includes test for quality and specification of input and output.

Applied or directed research – Such research differ from basic research in that it aims at producing definite results. It is usually limited to the study of field closely related to organisation’s existing areas of business. This type of research takes help of available knowledge or new facts uncovered by a company’s basic research. Such research is generally done for improving the existing products, processes, methods or equipment which can provide more profits and for providing improved measures of health, safety and convenience. It may relate to raw materials and other resource utilization and management of personnel and human relations. The more immediate payoff potential in this research makes it more practical for commercial undertaking than basic research.