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Definition of Direct costs
costs that are readily traceable to particular products or services.
costs that are necessary to produce a product/service but are not readily traceable to particular products or services â€“ see overhead.
Legal and administrative costs of liquidation or reorganization. Also includes
The total of all direct costs.
A general term referring to indirect costs.
A relatively new method advocated for the
Overhead generally refers to indirect, in contrast to direct,
A costing methodology that only assigns direct labor and material costs
The incremental costs of having an agent make decisions for a principal.
costs that increase with increases in the level of investment in current assets.
A method of cash budgeting based on detailed estimates of cash receipts and cash
Lease in which the lessor purchases new equipment from the manufacturer and leases it to the
Commercial paper sold directly by the issuer to investors.
Selling a new issue not by offering it for sale publicly, but by placing it with one of several
For foreign exchange, the number of U.S. dollars needed to buy one unit of a foreign currency.
Buyers and sellers seek each other directly and transact directly.
Direct stock-purchase programs
The purchase by investors of securities directly from the issuer.
The difference between the execution price of a security and the price that would have
Foreign direct investment (FDI)
The acquisition abroad of physical assets such as plant and equipment, with
costs, both implied and direct, associated with a transaction. Such costs include time, effort,
Incremental costs and benefits
costs and benefits that would occur if a particular course of action were
For foreign exchange, the number of units of a foreign currency needed to buy one U.S.$.
Transaction costs that include the assessment of the investment merits of a financial asset.
Market impact costs
Also called price impact costs, the result of a bid/ask spread and a dealer's price concession.
Market timing costs
costs that arise from price movement of the stock during the time of the transaction
The difference in the performance of an actual investment and a desired investment
Price impact costs
Related: market impact costs
Round-trip transactions costs
costs of completing a transaction, including commissions, market impact
costs associated with locating a counterparty to a trade, including explicit costs (such as
costs that have been incurred and cannot be reversed.
costs of buying and selling marketable securities and borrowing. Trading costs include
The time, effort, and money necessary, including such things as commission fees and the
costs that are identifiable with and able to be influenced by decisions made at the business
costs that do not change with increases or decreases in the volume of goods or services
The costs that relate to a period of time.
costs that are constant within a defined level of activity but that can increase or decrease when
costs that have both fixed and variable components.
A budget cost for materials and labour used for decision-making, usually expressed as a per unit cost that is applied to standard quantities from a bill of materials and to standard times from a
costs that have been incurred in the past.
A method of preparing the operating section of the Statement of Cash Flows that uses the companyâ€™s actual cash inflows and cash outflows.
Direct write-off method
A method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers.
A method of preparing the operating section of the Statement of Cash Flows that does not use the companyâ€™s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities.
capitalization of costs
When a cost is recorded originally as an increase
fixed expenses (costs)
Expenses or costs that remain the same in amount,
a cost that is distinctly traceable to a particular cost object
see variable costing
the time spent by individuals who work specifically
a readily identifiable part of a product; the cost of such a part
a service department cost allocation approach
a cost that cannot be traced explicitly to a particular
A cost that can be clearly associated with specific activities or products.
Labor that is specifically incurred to create a product.
Direct materials cost
The cost of all materials used in a cost object, such as finished goods.
Direct materials mix variance
The variance between the budgeted and actual mixes of
A member of a companyâ€™s Board of directors.
A cost that is not directly associated with a single activity or event. Such
The cost of any labor that supports the production process, but which is
costs of maintaining current assets, including opportunity cost of capital.
costs of financial distress
costs arising from bankruptcy or distorted business decisions before bankruptcy.
costs that do not depend on the level of output.
costs incurred from shortages in current assets.
costs that have been incurred and cannot be recovered.
costs that change as the level of output changes.
Taxes paid by consumers when they buy goods and services. A sales tax is an example.
The costs to firms of changing their prices.
The direct transfer of payroll funds from the company bank account
Costs Capitalized in Stealth
A particularly egregious form of aggressive cost capitalization
A format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities.
Advertising designed to elicit sales to customers who can be
A format for the operating section of the cash-flow statement that
Policy Acquisition Costs
costs incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium
The costs of additional regulation, including higher taxes, borne by large and
A form of start-up cost incurred in preparing for the opening of a new store or facility.
costs related to such onetime activities as opening a new facility, introducing
The price of obtaining capital, either borrowed or equity, with intent to carry on business operations.
Undepreciated Capital Costs
The tax definition of the value of an asset that is eligible for tax deprecation.
A system where funds are electronically credited to your account by a financial institution or a payroll service. For example, you can arrange with your employer to have your pay cheques automatically deposited into your no fee bank account.
InteracÂ® Direct Payment
Instead of paying with cash or a credit card, Interac direct Payment allows you to pay for your purchase with a debit card, such as your bank card. The amount of the purchase is electronically debited, or withdrawn, from your bank account (see debit card).
pre-authorized direct deposit
A system where funds are electronically credited to your account by a financial institution or a payroll service.
Bankruptcy cost view
The argument that expected indirect and direct bankruptcy costs offset the other
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Refers to the sum of manufacturing direct labor and overhead
This is a key factor in the profit model of a business. Product
a cost accumulation and reporting
the total of all costs (direct material, direct labor,
normal cost system
a valuation method that uses actual
standard cost system
a valuation method that uses predetermined
a cost accumulation and reporting method
Cost of goods sold
The accumulated total of all costs used to create a product or service,
A factor that has a direct impact on the incurring of a cost. For example, adding
All the costs incurred during the manufacturing process, minus the
The total of all costs assigned to a product, typically including direct
Cost of goods sold
The charge to expense of the direct materials, direct labor, and
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