Cost terms and concepts Flashcards
What is a cost object
Any activity for which we are trying to ascertain the cost.
What is an example of a cost object
- A department of a company
2. A unit of product or service
What are the three different types of organisations
- Manufacturing
- Merchandising
- Service
What are cost elements
A cost element is the cost of a resource that is consumed by an activity
What is a direct cost
A cost that can be traced in full to the cost object
What is another word used to describe a direct cost
Prime Cost
What is an indirect cost
A cost that is incurred which cannot be traced directly and in full to the cost object
What are product costs
Costs identified with goods produced or purchased for resale
What are period costs
Costs deducted as expenses during a particular period
What are variable costs
A variable cost tends to vary directly with the level of activity.
The variable cost per unit remains constant whereas total variable cost increases as volume of output increases.
What is a fixed cost
A fixed cost is a cost that, within a relevant range of activity level, is not affected by increases or decreases in the level of activity.
Fixed costs are a period charge. E.G. Factory rent
What are semi-variable costs
Costs that are part-fixed and part-variable and are therefore PARTLY affected by changes in the level of activity
Examples include electricity, gas bills and sales representatives salaries.
