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14 Cards in this Set
- Front
- Back
Fixed costs
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Constant or unchanging regardless of the level of output or activity
i.e. factory floor space and equipment |
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Variable costs
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Depends on the output or activity
i.e. labor costs |
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Marginal cost
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The variable cost for one more unit; used to decide whether additional units are made
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Average cost
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The total cost divided by the number of units; used to obtain an overall per-unit picture of the investment
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Breakeven point
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The level of activity at which total costs are equal to the total revenue
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Profit region
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Values of the variable x greater than the breakeven point, where the total revenue is less than the total costs
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Loss region
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Values of the variable x less than the breakeven point, where the total revenue is less than the total costs
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Sunk costs
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Money already spent as a result of a past decision
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Opportunity costs
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Costs associated with using a resource in one activity instead of another
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Recurring costs
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Any cost that is known and anticipated, and occurs at regular intervals
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Nonrecurring cost
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One-of-a-kind expenses that occur at irregular intervals.
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Incremental cost
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The change in cost that results from a change in output; the concept of focusing on the differences between alternatives
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Indirect costs
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Costs not directly associated with a product. Also known as overhead.
Example: Taxes, administration costs, security costs. |
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Cash cost
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Money that comes out of an account.
Depreciation and credit are *not* cash costs. |