Cost
A resource sacrificed or forgone to achieve a specific object; not always an expense - may be capitalized and recorded as an asset.
Cost Object
Anything for which a measurement of cost is needed.
Direct Costs
Costs that are specifically incurred for a particular cost object and can be traced to a particular cost object in an economically feasible way.
Indirect Costs
Costs that are incurred to support a cost object but cannot be traced to a particular cost object in an economically feasible way - they must be allocated.
Variable Cost
A cost that changes in total in proportion to the activity or volume; cost per unit remains constant.
Fixed Cost
A cost that doesn't change in total as the activity or volume changes.
Relevant Range
The range over which cost relationships remain constant; volume or activity can be sustained without increasing capacity.
Inventoriable Costs
All costs of a product that are regarded as assets when they are incurred; expensed (become COGS) when the product is sold.
Period Costs
Costs that are expensed in the period in which they are incurred; costs that are expected to benefit revenues in the current period and are not expected to generate revenues in future periods.
Manufacturing Firm
Produce and sell products; maintain three inventory accounts - materials, work in process, finished goods.
Merchandising Firm
Sell products that have been produced by another company; maintain an inventory of products for resale.
Service Firm
Sell service to public (accounting firms, law firms, physicians) and do not maintain an inventory.
