A method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst's prior knowledge of how the cost in the account behaves.
A measure of whatever causes the incurrence of a variable cost.
All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing or selling.
Investments in facilities, equipment and basic organizational structure that can't be significantly reduced even for short periods of time without making fundamental changes.
Committed fixed costs
A cost that is incurred to support a number of cost objects but that cannot be traced to them individually.
An income statement format that organizes costs by their behavior. Costs are separated into variable and fixed categories rather than being separated into product and period costs for external reporting purposes.
The amount remaining from sales revenues after all variable expenses have been deducted.
Direct labor cost plus manufacturing overhead cost.
The way in which a cost reacts to changes in the level of activity.
Anything for which cost data are desired.
The relative proportion of fixed, variable, and mixed costs in an organization.
A variable that responds to some causal factor; as represented by the letter Y, in the equation Y=a+bX
A difference in cost between two alternatives
The difference in revenue between two alternatives.
A cost that can be easily and conveniently traced to a specific cost object.
Factory labor costs that can be easily traced to individual units of product. Also called touch labor.
Materials that become an integral part of a finished product and whose costs can be conveniently traced to it.
Those fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research.
Discretionary fixed costs
A detailed analysis of cost behavior based on an industrial engineer's evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs.
A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range.
A method of separating a mixed cost into its fixed and variable elements by analyzing the change in cost between the high and low activity levels.
An increase in cost between two alternatives.
A variable that acts as a casual factor; as represented by the letter X, in the equation Y=a+bX
A cost that cannot be easily and conveniently traced to a specified cost object
The labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products.
Small items of material such as glue and nails that may be an integral part of a finished product, but whose costs cannot be easily or conveniently traced to it.
Synonym for product costs
A method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors.
Least-squares regression method
Cost behavior is said to be linear whenever a straight line is reasonable approximation for the relation between cost and activity.
Linear cost behavior
All manufacturing costs except direct materials and direct labor.
A cost that contains both variable and fixed cost elements.
The potential benefit that is given up when one alternative is selected over another.
Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued.
Direct materials cost plus direct labor cost.
All costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead.
Any materials that go into the final product.
The range of activity within which assumptions about variable and fixed cost behavior are valid.
All costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer.
A cost that has already been incurred and that cannot be changed by any decision made now or in the future.
A cost that varies, in total, in direct proportion to changes in the level of activity