Costing Definitions Flashcards Preview

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Flashcards in Costing Definitions Deck (4):
1

Marginal Costing

A technique that focuses on variable costs and contribution to fixed costs and profits.
It is primarily used for short term decision making. (One off orders).

2

Absorption Costing

Focuses on overheads and full cost recovery through the apportionment of overheads to production cost centres on some equitable basis, and the calculation of OAR for cost units.

3

Activity Based Costing (ABC)

A development of absorption costing and focuses on overheads and full cost recovery.
Arguably more accurate as it focuses on cost drivers and avoids splitting overheads between cost centres.

4

Standard Costing

Based on budgeted costs / revenues that should be achievable assuming reasonable levels of efficiency.
It compares actual results with budgeted figures to identify efficiency related variances.