Core-Cost Accounting Language

Question 1

Cost object

Answer 1

Any item (product, service, activity, customer, channel) for which a separate cost measurement is required

Question 2

Cost driver

Answer 2

A factor that causes a change in the cost of an activity (e.g. labour‑hours, kWh)

Question 3

Product costs

Answer 3

Manufacturing costs that are capitalised in inventory and expensed when the product is sold

Question 4

Period costs

Answer 4

Non‑manufacturing costs (e.g. admin, selling) expensed in the period incurred

Question 5

Direct vs Indirect costs

Answer 5

Direct: traced economically to a cost object; Indirect (overheads): need allocation/apportionment

Question 6

Variable cost

Answer 6

Changes in direct proportion to activity volume

Question 7

Fixed cost

Answer 7

Remains unchanged within the relevant range for a given time span

Question 8

Semi‑variable (mixed) cost

Answer 8

Contains both fixed and variable elements

Question 9

Stepped fixed cost

Answer 9

Fixed in a band of activity, then jumps to a new level once capacity is exceeded