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Continuing the construction actually involves spending $0.5 million for a return of $1.2 million, which makes it the correct course of action. A managerial accounting term for costs that are specific to management's decisions. The concept of relevant costs eliminates unnecessary data that could complicate the decision-making process.
Along with variable costs, fixed costs make up one of the two components of total cost: total cost is equal to fixed costs plus variable costs. In accounting and economics, fixed costs, also known as indirect costs or overhead costs, are business expenses that are not dependent on the level of goods or services produced by the business. They ...
An explicit cost is a direct payment made to others in the course of running a business, such as wage, rent and materials, [1] as opposed to implicit costs, where no actual payment is made. [2] It is possible still to underestimate these costs, however: for example, pension contributions and other "perks" must be taken into account when ...
Generational accounting is a method of measuring the fiscal burdens facing current and future generations. Generational accounting considers how much each adult generation, on a per person basis, is likely to pay in future taxes net of transfer payments, over the rest of their lives.
Standard Costing is a technique of Cost Accounting to compare the actual costs with standard costs (that are pre-defined) with the help of Variance Analysis. It is used to understand the variations of product costs in manufacturing. [6] Standard costing allocates fixed costs incurred in an accounting period to the goods produced during that period.
The break-even point (BEP) in economics, business—and specifically cost accounting—is the point at which total cost and total revenue are equal, i.e. "even". In layman's terms, after all costs are paid for there is neither profit nor loss.
In economics, a transaction cost is a cost incurred when making an economic trade when participating in a market. [ 1 ] The idea that transactions form the basis of economic thinking was introduced by the institutional economist John R. Commons in 1931.
True Cost Accounting (TCA) is an accounting approach that measures and values the hidden impacts of economic activities on the environment, society and health. TCA is also referred to as full cost accounting (FCA) or “multiple capital accounting (MCA)”. [ 1 ]