Financial Lingo Flashcards
ABC
Activity Based Costing.
A costing methodology that identifies activities in an organization and assigns the cost of each activity with resources to all products and services according to the actual consumption by the products and services. This model assigns more indirect costs into direct costs compared to conventional costing models.
ARC
Additional Resource Costs.
Pronounced “Arks”. Refers to an adjustment to a service contract based on an increase in the volume of services performed by the vendor. An ARC is the additional charge (above the base charge) that is paid for each pricing unit that is used above the volume baseline. If usage is less than the volume baseline, then a “reduced resource credit RRC” is applied to reduce the base charge. (see RRC.).
RRC
Reduced Resource Credit.
RRC credits granted for reduction in resources consumed or provided offer the enterprise customer reduced cost but tend to be equivalent to the increased costs when paying for incremental resources in excess of the threshold.
