Accounting
the collection analysis and reporting of information used in economic decision making
Cost
a sacrifice of resources
expense
a cost incurred in the process of generating revenues
Outlay cost
involves an actual expenditure of cash
opportunity cost
involves a sacrifice of potential revenue
differential cost
a cost that changes if you change some decision
sunk cost
a cost that remains constant if you change some decision
fixed cost
a cost that does not change when production volume changes
variable cost
a cost that changes in proportion to production volume
mixed cost
a combination of fixed and a variable cost
step cost
a cost that increases in steps as production volume changes
cost object
something that generates costs in a firm, such as a product or a department
direct cost
a cost that can be directly attributed to a specific cost object
indirect cost
a cost that cannot be directly attributed to a specific cost object
overhead
all costs except direct labor and materials
product costs
costs that can be associated with products
period costs
costs that can be associated with time periods
full absorption cost
a measure of product costs that includes any cost associated with manufacturing and excludes any cost associated with marketing or general administration
profit margin
revenue - total cost
operating margin
revenue - operating cost
gross margin
revenue - COGS
contribution margin
revenue - variable cost
cost driver
the underlying cause of a particular cost
Activity Based Costing
a methodology for selecting cost pools and allocation bases. It is a systematic approach that involves multiple pools, each associated with an important production activity
ancillary costs
anticipated costs that will occur regardless of the decision