COST CONCEPTS Flashcards
Define a cost as a reduction in the value of an asset for the purpose of securing benefit or gains.
Accountants
Are those that are normally unaffected by changes in sales volume.
Ex. Taxes & Rents
Fixed Cost
Cannot normally be changed in short term such as fixed cost like rent, interest on a mortgage & taxes.
Uncontrollable Cost
Are those that are clearly related to business volume. As business volume increases, variable cost will increase.
Variable Cost
Can change in the short term like variable cost.
Controllable Cost
Includes salaries and wages often referred to as labor cost.
Payroll Cost
May be food & beverage portion as in the cost of one item or hourly unit of work.
Unit Cost
The total of food & beverage portions served in one period such as a week or a month total cost of labor for one period.
Total Cost
Refer to the cost of materials and labor.
Prime Cost
Are all cost that are historical, can be found in business records, book of account.
Historical Cost
Used for planning and determining the future to develop planned costs. Also called as budgeting.
Planned Cost
