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Cost–volume–profit analysis (CVP)
A method for understanding the relationship between revenue, cost and sales volume.
A method of costing in which all fixed and variable production costs are charged to products or services using an allocation base.
a cost accumulation and reporting
A methodology under which all manufacturing costs are assigned
Accelerated cost recovery system (ACRS)
Schedule of depreciation rates allowed for tax purposes.
the process of detailing the various repetitive actions that are performed in making a product or
A method of costing that uses cost pools to accumulate the cost of significant business activities and then assigns the costs from the cost pools to products or services based on cost drivers.
activity based costing (ABC)
A relatively new method advocated for the
activity-based costing (ABC)
a process using multiple cost drivers to predict and allocate costs to products and services;
Activity-based costing (ABC)
A cost allocation system that compiles costs and assigns
The actual expenditure made to acquire an asset, which includes the supplierinvoiced
actual cost system
a valuation method that uses actual direct
After-tax profit margin
The ratio of net income to net sales.
Agency cost view
The argument that specifies that the various agency costs create a complex environment in
The incremental costs of having an agent make decisions for a principal.
Aggressive Cost Capitalization
cost capitalization that stretches the flexibility within generally
Total costs, explicit and implicit.
Allocation base A measure of activity or volume such as labour
hours, machine hours or volume of production
cost of a security adjusted for the amortization of any purchase premium or
a quality control cost incurred for monitoring
attribute-based costing (ABC II)
an extension of activitybased costing using cost-benefit analysis (based on increased customer utility) to choose the product attribute
Average-Cost Inventory Method
The inventory cost-flow assumption that assigns the average
Average cost of capital
A firm's required payout to the bondholders and to the stockholders expressed as a
costs that are identifiable with and able to be influenced by decisions made at the business
a streamlined cost accounting method that speeds up, simplifies, and reduces accounting effort in an environment that minimizes inventory balances, requires
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other
BARRA's performance analysis (PERFAN)
A method developed by BARRA, a consulting firm in
A cost that is incurred when a group of products or services are produced,
a cost that is caused by a group of things
Before-tax profit margin
The ratio of net income before taxes to net sales.
The cumulative book income plus any gain or loss on disposition of the assets on termination of the SAT.
An analysis of the level of sales at which a project would make zero profit.
analysis of the level of sales at which the company breaks even.
An analytical technique for studying the relationships between fixed cost, variable cost, and profits. A breakeven chart graphically depicts the nature of breakeven analysis. The breakeven point represents the volume of sales at which total costs equal total revenues (that is, profits equal zero).
a planned expenditure
Capital Cost Allowance (CCA)
The annual depreciation expense allowed by the Canadian Income Tax Act.
capital investment analysis
Refers to various techniques and procedures
capitalization of costs
When a cost is recorded originally as an increase
Capitalized Cost An expenditure or accrual that is reported as an asset to be amortized against
costs that increase with increases in the level of investment in current assets.
the total variable cost of carrying one unit of
The cost of holding inventory, which can include insurance,
costs of maintaining current assets, including opportunity cost of capital.
The amount of cash expended.
cash flow from operating activities, or cash flow from profit
This equals the cash inflow from sales during the period minus the cash
A statistical technique that identifies clusters of stocks whose returns are highly correlated
a cost related either to the long-term investment
The representing of accounting information over multiple years as percentages
company cost of capital
Expected rate of return demanded by investors in a company, determined by the average risk of the company’s assets and operations.
Comparative credit analysis
A method of analysis in which a firm is compared to others that have a desired
a cost over which a manager has the ability to authorize incurrence or directly influence magnitude
The profit made by a division after deducting only those expenses that can be controlled by the
Refers to the sum of manufacturing direct labor and overhead
the total of direct labor and overhead cost;
an analytical technique that uses statistical
A resource sacrificed or forgone to achieve a specific objective (Horngren et al.), defined
the cash or cash equivalent value necessary to attain an
The expense incurred to create and sell a product or service. If a product is not
a discipline that focuses on techniques or
Cost Accounting Standards Board (CASB)
a body established by Congress in 1970 to promulgate cost accounting
the approach to product costing that determines
the assignment, using some reasonable basis,
the practice of finding acceptable alternatives
An asset’s purchase price, plus costs associated with the purchase, like installation fees, taxes, etc.
The idea that fixed costs and variable costs react differently to changes in the volume of
The calculation and comparison of the costs and benefits of a policy or project.
cost-benefit analysis the analytical process of comparing the
relative costs and benefits that result from a specific course
The net present value of an investment divided by the investment's initial cost. Also called
a responsibility center in which the manager has
A division or unit of an organization that is responsible for controlling costs.
Cost company arrangement
Arrangement whereby the shareholders of a project receive output free of
a company-wide attitude about the topics
the practice of minimizing, to the extent
The process of either reducing costs while maintaining the same level of productivity or maintaining costs while increasing productivity.
cost control system
a logical structure of formal and/or informal
A method of expensing the cost of a resource consumed by first determining
The most significant cause of the cost of an activity, a measure of the demand for an activity
a factor that has a direct cause-effect relationship
A factor that directly impacts the incidence of a cost, and which is generally
cost driver analysis
the process of investigating, quantifying,
cost leadership strategy
a plan to achieve the position in a
cost management system (CMS)
a set of formal methods
Anything for which a measurement of cost is required – inputs, processes, outputs or responsibility centres.
An item for which a cost is compiled. For example, this can be a product,
Cost of capital
The required return for a capital budgeting project.
Cost of capital
The costs incurred by an organization to fund all its investments, comprising the risk-adjusted
cost of capital
Refers to the interest cost of debt capital used by a business
Cost of Capital
The minimum rate of return a company must earn in order to meet
Cost of capital
The blended cost of a company’s currently outstanding debt instruments
Cost of Capital
The discount rate that should be used in the capital budgeting process.
cost of capital (COC)
the weighted average cost of the
Cost of carry
Related: Net financing cost
Cost of Common Stock
The rate of return required by the investors in the common stock of
Cost of Debt
The cost of debt (bonds, loans, etc.) that a company is charged for
Cost of Equity
Same as the cost of common stock. Sometimes viewed as the
Cost of funds
Interest rate associated with borrowing money.
cost of goods manufactured (CGM)
the total cost of the
Cost of goods sold
The cost of merchandise that a company sold this year. For manufacturing companies, the cost of raw
Cost of goods sold
See cost of sales.
Cost of goods sold
The cost of the items that were sold during the current period.
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