In economics and accounting, the word "cost" is a linguistic representation of a highly complicated economic phenomena. Present chapter involves in formulating a proper approach to organize and classify different cost concepts and its importance in deciding the cost of production of different agriculture commodities. Selected cost concepts from the popular literature is been examined in order to explain the concept easily. Along with the cost concepts, important principles of farm management is also taken into study to intensifies the clarity behind the different approach and to understand the significance of such principle. Cost concepts have more importance in formulating the cost of production which helps in determining the MSP of agricultural commodities.