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14 Cards in this Set

  • Front
  • Back
Fixed costs
Constant or unchanging regardless of the level of output or activity

i.e. factory floor space and equipment
Variable costs
Depends on the output or activity

i.e. labor costs
Marginal cost
The variable cost for one more unit; used to decide whether additional units are made
Average cost
The total cost divided by the number of units; used to obtain an overall per-unit picture of the investment
Breakeven point
The level of activity at which total costs are equal to the total revenue
Profit region
Values of the variable x greater than the breakeven point, where the total revenue is less than the total costs
Loss region
Values of the variable x less than the breakeven point, where the total revenue is less than the total costs
Sunk costs
Money already spent as a result of a past decision
Opportunity costs
Costs associated with using a resource in one activity instead of another
Recurring costs
Any cost that is known and anticipated, and occurs at regular intervals
Nonrecurring cost
One-of-a-kind expenses that occur at irregular intervals.
Incremental cost
The change in cost that results from a change in output; the concept of focusing on the differences between alternatives
Indirect costs
Costs not directly associated with a product. Also known as overhead.

Example: Taxes, administration costs, security costs.
Cash cost
Money that comes out of an account.

Depreciation and credit are *not* cash costs.