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9 Cards in this Set
- Front
- Back
Cost
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Sacrifice or resources
Not just cash Meaning in context: Amount paid in past Amount paid to replace Rental fee Ammount foregone because don't sell Amount paid less accumulated depreciation |
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Opportunity Cost
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Amount foregone from the "roads not taken"
Best alternative use In contrast with Outlay costs is how much you spend for something you don't have or how much would you take for something you have |
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Differences between Cost and Expenses
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All expenses are costs, not all costs are expenses.
Timing distinguishes costs from expenses Expenses are recorded in accounting records while costs are not. All costs will become expenses at a later time |
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Direct Cost
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Can be traced directly to a product or service.
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Indirect Cost
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Cannot be directly traced to a product or service.
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Cost Object
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Any item for which the manager wishes to measure cost.
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Fixed Cost
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Costs that do not change in total with the level of activity.
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Variable Cost
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Costs that change in total as the level of activity changes.
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What causes cost?
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Producing a product requires activities, which in turn generate costs. Activity-based-management studies the need for activities and whether they are operating efficiently.
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