5.2 Cost Flashcards
1
Q
Direct cost
A
These costs can be clearly identified with each unit of production and can be allocated to a cost center.
2
Q
Indirect cost
A
Costs that cannot be identified with a unit of production or allocated accurately to a cost center.
3
Q
Fixed cost
A
Costs that do not vary with output.
4
Q
Variable cost
A
Costs that vary as output changes, such as the direct cost of materials used in making the products.
5
Q
Semi variable cost
A
Include both a fixed and variable element.
6
Q
Breaking even point
A
The level of output at which total costs = total revenue. Neither profit or loss is made.
7
Q
Margin of safety
A
The amount by which the sales level exceeds the break even level of output.
