Cost Classification and Behaviour Flashcards
What is a budget
a formalised, numerical plan which represents what the business wants to achieve in the forthcoming period.
what is a fixed cost
a cost that does not vary with output
what is a stepped fixed cost
they are fixed costs in nature within certain levels of activity
what is a semi variable cost
part fixed and part variable
what is formula for total cost
fixed cost + (variable cost per unit x no of units)
what does capital expenditure include
purchase of non current assets
improvement of earning capability of NCA’s
what does revenue expenditure include
purchases of goods for resale
maintenance of NCA’s
expenditurre
three examples of production costs
labour
materials
overheads
three examples of non production costs
Finance
Marketing
Distribution
Admin
what are costs centres
areas of a business fowhich costs are incurred such as the factory or canteen
what is a profit centre
where costs and sales occur like a shop
what is a revenue centre
accountable for revenue only
what is an investment centre
profit centres with additional responsibility for capital investment i.e an independant restuarant.
what is the def for overhead absorption rate
is an estimated amount of frixed production overhead used to produce one cost per unit.
what is a cost pool
breakdowns of total overheads into different categories depending on the activity that has generated the cost
