Costing and Decision Making
Balanced Scorecard
A strategy performance management tool that includes financial and non-financial measures to monitor and measure effectiveness of processes, strategies, and outcomes
Time-Driven Activity-Based Costing
A variant of ABC that determines costs based on the time required to perform activities
Variable Costs
Costs that change in proportion to the level of production or sales
Fixed Costs
Costs that do not change with the level of production or sales
Cost Assignment
Allocating costs to different departments, products, or services based on relevant cost drivers
Activity-Based Costing (ABC)
A costing method that assigns the cost of each activity to products and services based on actual consumption
Cost Driver
A factor that causes a change in the cost of an activity
Process Improvements
Actions taken to enhance the efficiency, quality, or performance of specific processes within an organization
Activity-Based Cost
Activity Minutes multiplied by Cost per Minute
Peak-Usage Hourly Rate
Average Cost Per Hour multiplied by ((Peak Hours + Excess Capacity Hours) divided by Peak Hours)
Support Costs per Meal
Fixed Costs divided by Number of Meals Served
Unused Capacity
Practical Capacity minus Used Capacity
Cost of Unused Capacity
The cost associated with the difference between practical capacity and used capacity
Cost Recomputation
Recalculating costs based on changes in demand, capacity, or other variables
Capacity Cost Rate
The cost per unit of capacity, calculated as total cost divided by practical capacity
Practical Capacity
The maximum amount of work that can be completed in a specific period under normal working conditions
Unassigned Costs
Total Committed Resource Costs minus Total Assigned Costs
Average Cost Per Hour
Total Cost divided by Total Hours
Net Income
Total revenue minus total expenses for a given period
