Costing Terms

Acceleration Claims as the name suggests referring to the claim for costs to speed up or accelerate the work. Such claims are common in construction or real estate projects. Many contractors, however, don’t pay attention to such claims and think of them as irrelevant. But, such claims could prove very useful if the contractors follow the set protocol. Also, to claim such a thing, it is very important that contractors track the work accurately.

Preventive costs, as the name suggests are the costs that a company incurs to prevent defects from occurring in a product or service. For example, a company investing in training employees to continuously monitor products for faults or defects. There are four categories of cost of quality.

External failure cost is one of the three types of cost of quality. It includes the cost a company incurs after a defective product or service reaches the customer and it malfunctions. Two common examples of this cost are warranty cost, cost of the return, and cost of return and replacement.

Target Profit Pricing, is a strategy that tells the management the total units to be sold to achieve the targeted profit for a particular period. Under this strategy, after considering total costs and profit targets, the management decides on the total production and sales for a particular period. This period can be a month, quarter, or even a financial year.

Internal failure cost is one of the four types of costs of quality. Three other costs are -preventive costs, appraisal costs, and external failure costs. Internal failure costs, as the word suggests, are the failure costs that are internal to the company. We can also call these costs like the loss to the company.

Cost Accumulation is the process of collecting all costs information about the business with the help of the cost accounting system. It is a process of collection of all relevant data regarding the various costs incurred by the company at various stages of production. This calculation is the result or outcome of the cost accounting system prevalent or practices in the company.

Meaning of a Cost Center? The Cost Center is a department or

Job Costing is the method of determining costs, including materials, labor, and

What is Computer Integrated Manufacturing?When an organization manage their manufacturing or production

Diseconomies of Scale-Meaning Diseconomies of scale happen when the size of the

Merchandise Inventory is the most common form of inventory or the inventory

Manufacturing inventory or Production inventory is one of the many types of