Cost estimating (L10) Flashcards
What is a direct cost?
A cost that can be easily tracked to a product or a service.
What is an indirect cost?
A cost that cannot be easily tracked to a product or a service.
What is overhead? What is it used for?
All indirect costs. It is used in the service industry and accounted for in your hourly rate.
What are the three different types of accounting? and what do they do?
Financial accounting- financial statement to convey information to outside parties.
Management accounting- Information useful to the company.
Cost accounting- Costs are allocated to products
What are expenditures?
Money paid for a service or an asset.
What are expenses?
Money used during the year
What are the three costing methods?
Process costing, Job-order costing and activity based costing.
What does process costing entail?
Average cost for each job.
What does job order costing entail?
Differentiates direct costs per job to see profitability.
What does activity based costing entail?
Calculates percentage of overhead assigned to a job.
define Price.
Result of a monetary agreement between two parties when something is exchanged between them.
What level of accuracy do you need to reach?
Not very high, Increasing accuracy costs money.
