Economy Flashcards
Compensation paid for the use of borrowed capital
Interest
Capital needed to supply the necessary manufacturing and plant facilities
Fixed-capital investment
Fixed capital investment Equation
direct costs + indirect costs
Reduction in the value of an asset with the passage of time, due in particular to wear and tear.
Depreciation
Costs that change little or not at all with the amount of production are designated
Fixed Charges
*local property taxes, insurance, and loan interest.
Annual costs for rented land and buildings
Rent
The expenses connected with executive and administrative activities
Administrative Costs
Capital needed for the operation of the plant
Working capital
Fixed + Working capital
Total capital investment
Cash kept on hand for monthly payment of operating expenses, such as salaries, wages, and raw-material purchases,
Working capital
Turnover ratio equation
TOR = (annual gross sales)/(fixed capital investment)
Gross profit equation
(product sales revenue) - (total product cost)
Material and labor involved in actual installation of complete facility
Direct costs
Expenses which are not directly involved with material and labor of actual installation of complete facility
Indirect costs
Gross domestic product (GDP)
Total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
