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Costs

TermDefinition
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