Cost Justification

Cost justification is a substantiation of the need for an item of expenditure, with documentary or any other evidence. Business owners or managers may require the person incurring the cost to explain the reasons for doing so, and expect proof that expected returns would exceed the cost. All expenditure of substantial nature, not included in the annual budget require such cost justification. At times, even items mentioned in the budget may also require a justification to ensure optimal utilization of monetary resources.