Costing

Activity-Based Costing (ABC)

A cost attribution technique that assigns costs to cost units based on indirect activities.

Cost Objects

Individual activities such as products, customers, services, and locations that incur costs.

Activities

Events or tasks with a specific purpose, categorized into support activities and production process activities.

Cost Pool

A grouping of individual cost items allocated to specific activities within a business operation.

Cost Drivers

Variables that cause overhead costs, affecting costs proportionately based on the level of activity.

Cost Hierarchies

Levels that designate activities based on their traceability to a product, including output unit-level, batch-level, product-sustaining, and facility-sustaining costs.

Unit Costing

A method used in industries producing identical products, calculating average unit costs by dividing total costs by the number of units produced.

Job Costing

A cost allocation method for custom products, tracking costs for unique orders or contracts.

Batch Costing

A costing method for producing goods in similar units, focusing on batch-wise cost collection and identical products.

Economic Batch Quantity (EBQ)

The optimal batch size where storage costs equal set-up costs, minimizing total costs.

Process Costing

A method determining product costs at each manufacturing operation, suitable for continuous or repetitive processes.

Service Costing

A method determining the cost per unit of services rendered, applicable to service firms and internal services.

Retail Inventory Method

A technique used by retailers to estimate ending inventory based on the relationship between cost and retail price.

Product Cost Percentage

The percentage increase from a product's cost to its selling price.

Cost of Sales

The total costs incurred to create products or services that have been sold.

Sales Markdown

The reduction in a product's original retail price compared to its actual selling price.