Cost And Revenues Flashcards
What is prime cost?
All direct costs associated to unit cost (material, labour and expenses)
What are the characteristics of a fixed cost?
- Total cost stays constant
2. Unit varies
What are the characteristics of a variable cost?
- Total cost varies
2. Unit cost stays constant
What are the characteristics of a semi-variable cost?
- Total cost varies
2. Unit cost varies
How is a semi variable cost split?
High low method
How is the high low method used for semi variable cost splitting?
- Take highest cost and lowest cost and determine difference in cost and units
- Gives cost variance per unit of difference
- This gives the variable element of the semi variable cost the remainder is the fixed cost
What are the different types of cost classification and examples?
By element (materials, labour, expenses)
By function (production and non production)
By nature (direct and indirect)
By behaviour (fixed, variable, stepped and semi-variable
What is the formula for economic order quantity?
EOQ = ((2 x Co x D) / Ch) sqr root
In inventory how is minimum level determined?
Re order level - (average usage x average lead time)
What is overhead allocation?
An overhead cost wholly attributed to a single cost centre
What is overhead apportionment?
An overhead split between multiple cost centres based on a fair or suitable basis
What is overhead absorption?
Charging of a production cost centre’s overhead costs to the cost u it’s produced by the cost centre
How do you calculate the OAR - overhead absorption rate?
Budgeted overhead \ budgeted units produced
What is the formula for breakeven point?
Fixed cost / Contribution(Unit)
What is the formula for margin of safety?
Budgeted sales units - breakeven sales units = margin of safety (units)
