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A cost object is a term used primarily in cost accounting to describe something to which costs are assigned. [1] Common examples of cost objects are product lines, geographic territories, customers, departments or anything else for which management would like to quantify cost. [2] The use of cost objects is common within activity based costing ...
The cost driver is a factor that creates or drives the cost of the activity. For example, the cost of the activity of bank tellers can be ascribed to each product by measuring how long each product's transactions (cost driver) take at the counter and then by measuring the number of each type of transaction.
Discretionary fixed costs usually arise from annual decisions by management to spend on certain fixed cost items. Examples of discretionary costs are advertising, insurance premia, machine maintenance, and research & development expenditures. Discretionary fixed costs can be expensive. [4]
Direct costs are costs that can easily be associated with a particular cost object. [2] However, not all variable costs are direct costs. For example, variable manufacturing overhead costs are variable costs that are indirect costs, not direct costs. Variable costs are sometimes called unit-level costs as they vary with the number of units ...
Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future. [2] Cost accounting information is also commonly used in financial accounting, but its primary function is for use by managers to facilitate their decision-making.
The most basic element of a cost estimate and therefore the cost database is the estimate line item or work item. [3] An example is "Concrete, 4000 psi (30 MPa)," which is the description of the item. In the cost database, an item is a row or record in a table (of items) and the description is a column or field for that record.
Goodwill is treated as an intangible asset in the consolidated statement of financial position. It arises in cases where the cost of purchase of shares is not equal to their par value. For example, if a company buys shares of another company worth $40,000 for $60,000, there is a goodwill worth $20,000.
This information can manifest itself as cost items in a contract (e.g., construction costs, design fees, materials costs, FF&E costs, contingency costs, and more). Information can also relate to construction project schedules, and a broad range of processes whereby information is exchanged by the many stakeholders involved. These processes ...