Costing Terms
Difference between absorption costing and variable costing methods pertains mainly to the allocation of manufacturing costs and its effect on reporting of net income. Both absorption and variable cost …
Definition / Meaning Product costing is not an absolute term having a permanent definition. The definition of product costing varies with the purpose behind costing a product. A product …
What is Activity Based Costing (ABC)? Activity Based Costing (ABC) is a 2 step method of costing whereby costs are first allocated to ‘identified activities’ of a business and …
Meaning of Explicit Cost Costs resulting in an immediate outflow of cash from the business are termed as explicit costs. These costs are incurred during the production process or …
Break-Even Point Definition Break-even point is the level of production where the total revenues and total expenses of the company are equal. At the break-even point, the revenue of …
Meaning of Inventory Management Inventory Management is a practice of tracking and controlling the inventory orders, its usage and storage along with the management of finished goods that are …
5 Basic types of inventories are raw materials, work-in-progress, finished goods, packing material and MRO supplies. Inventories are also classified as merchandise and manufacturing inventory. Other such classifications on …
Relevant range is a level of volume or activity within which a company is expected to operate. All the budgeting and costing exercise are conducted with relevant range as …
Relevant costs are defined as the costs that arise in future and are different for different alternatives. The concept of relevant costs are used by management for making various …
Differential Cost or Incremental Cost is the difference in total relevant cost between two alternatives. Commonly, these alternatives are ‘make or buy’, ‘two different level of activity’, etc.
