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Costs
| Term | Definition |
|---|---|
| Expenses that are tied to a specific department or project. | Direct Cost |
| Expenses a company may incur that are not associated with a specific product or project within a company. | Indirect Cost |
| Cost that do not change based on production levels. | Fixed cost |
| Expenses that fluctuate proportionally with the quantity of output. | Variable cost |
| Costs directly tied to the activities of producing volume. | Variable Cost |
| Expense that has costs that change and do not change with production. | Mixed cost |
| Costs that experiences some change because of a decision that management makes. | Relevant cost |
| Costs not tied to a particular management. | Irrelevant cost |
| Costs that involve the company sending money. | Explicit cost |
| Opportunity cost without a dollar amount spent by the firm (monetary decision). | Implicit cost |
| Measure of the usefulness of something to the company (non-monetary decision). | Utility |
| Per unit cost that includes all fixed costs and all variable costs (Also known as Per Unit Total Cost). | Average total cost |
| The price that, if all units are sold, would result in no financial loss and financial gain. | Breakeven price |
| The increase or decrease in the total cost a business will incur by producing one more unit of a product or serving one more customer. | Marginal cost |
| The principle where any expenses you incurred to generate income should be reported in the same period as the income. | The maching principle |
| Costs that are not a necessary part of the process of producing a product or service to be sold. | Period cost |
| Costs associated with the manufacturing of a product that is intended for sale to costumers. | Product cost |
| Expenses related to the sales, marketing functions, and corporate of fix expenses. | Period costs in manufacturing |
| Expenses related to the knowledge or experience you are selling. | Period costs in service industries |
| Raw materials used to manufacture the product. | Direct materials |
| Manufacturing labor required to complete the manufacturing process. | Direct labor |
| Auxiliary costs to mamufacturate the product. | Manufacturing overhead |
| Costs froms selling a product. | Cost of goods sold |
| COGS | Costs of goods sold |
| Business expenses of purchasing materials and paying laborers to actually manufacturate the product. | Prime cost |
| Amount of money it takes to produce one unit of a product. | Unit cost |
| Direct labor costs combined with manufacturing overhead costs. | Conversion cost |
| Dollars already spent and permanently lost. | Sunk cost |
| System that helps a company match performance and activity to the objectives and goals of the organization. | Balanced scorecard |
| Metrics for a company to understand and manage the growth. | Key performance indicators |
| Chart that shows how the company is doing financially. | Financial statement |
| Chart that shows all of the assets that the company has versus it's liabilities and equity. | Balance sheet |
| Positives within a company. | Assets |
| Negatives withing a company. | Liabilities |
| Quantity of goods produced at one time. | Batch |
| Method used to assign the costs to a mass quantity of a product. | Process costing |
| Overhead directly related to the manufacturing of the product. | Manufacturing overhead |
| Costs asssociated with making a product. | Expenses |
| All the manufacturing costs added together in a deparment and passed along to another. | Transferred-in costs |
| Statement that show not only how much of total sales has been spent on variable costs, but also how much money is left after paying them. | Contribution marging statement |
| Analysis that let younknow when you've made enough of your prosucts to make a profit. | Cost-volume-profit analysis |
| Idea of what portion of our total sales makes up the contribution margin. | Contribution margin ratio |
| Costs of using an asset. | Depreciation |
| Represents the amount of sales thatvare available to cover fixed costs and contribute to prodit expressed as a percentagem | Contribution margin ratio |
| Extend to which a business has variable and fixed costs. | Operating leverage |
| Goals for how much money a company hopes to make. | Profit target |
| The difference between the break-even point and anticipated levels of production, expressed as a percentage | Margin of safety |
| Activity level ehere the company reasonably exoects to operate during a particular period of time. | Relevant rage |
| It iustrates the end result of changing a variable. | Sensitivity analysis |
| Mix of products or services tgat the company sells. | Sales mix |
| Statement that captures a company's revenue and expenses for a period of time and calculates rhe company's net income or net loss. | Traditional statement |
| When revenues are greater then expenses. | Net income |
| When exoenses are greater than revenue. | Net loss |
| Tool used to determine the relantionshio between selling price, costs, sales volume, and profit. | Cost-volume-product analysis |
| Process of identiying, evaluating, and managing potential constrains. | Theory of Constrains |
| A process where everytginf is custom made. | Pull production systems |
| Allows a company to make shure that it is changing a high enough price for its goods to meet all variable costs for that unit and some amount of fixed costs, as well as making profit. | Cost structure |
| Situation in wich a company has a large amount of monthly fixed costs. | High operating leverage |
| When a company has a low amount of monthly fixed costs. | Low operating leverage |
| Allow companies to focus only on what is important when considerinf potential decision. | Incremental analysis |
| Costs that cannot be changed. | Sunk cost |
| Activities used to estimate, allocate, and control costs of a project. | Project cost management |
Created by:
Alaborges
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