Key Words Flashcards
Integrity
Ethical principle requiring accounting staff to be straightforward and honest in all professional and business relationships.
Cost Unit
Unit of output to which costs can be charged.
Responsibility Centre
Segment of a business for which a manager is accountable for, they compare costs and revenues to budget.
Cost Centre
Segment of a business to which costs can be charged.
Profit Centre
Segment of a business to which costs can be charged, revenue can be identified, and profit can be calculated.
Investment Centre
Segment of a business where profit is compared with the amount of money invested in the centre.
Material Costs
The costs of raw materials, components and other goods used.
Labour Costs
The costs of employees’ wages and salaries.
Expenses
Other costs, which cannot be included in ‘materials’ or ‘labour’.
Direct Cost
A cost that can be identified directly with each unit of output.
Indirect Cost (Overhead)
A cost that cannot be identified directly with each unit of output.
Prime Cost (Direct Cost)
The total of all direct costs.
Fixed Costs
Costs which remain fixed over a range of output levels.
Semi-Variable Costs
Costs which combine a fixed and variable element.
Variable Costs
Costs which vary directly with output.
Total Cost Statement
List of the total of the direct costs and the overheads.
Product Cost
Costs that become part of the manufactured product.
Period Cost
Costs that cannot be assigned to the manufactured product and are incurred in a period of time, e.g monthly.
Production Costs
The total of manufacturing costs.
Absorption Costing
A costing method that includes all production overheads within the cost of the cost units.
Marginal Costing
A costing method that includes only variable costs within the cost of the cost units.
