Chapter 28 Business- Costs

Question	Answer
Direct costs	These costs can be clearly identified with each unit of production and can be allocated to a cost centre
Indirect costs	Costs that cannot be identified with a unit of production or allocated accurately to a cost centre
Fixed costs	Costs that do not cary with output in the short run
Variable costs	Costs that vary with output
Marginal costs	The extra cost of producing one more unit pf output
Break-even point of production	The level of output at which total costs equal total revenue - neither a profit nor a loss is made
Margin of safety	The amount by which the slaes level exceeds the break-even level of output
Contribution per unit	Selling price less variable cost per unit
Cost centre	A section of a business, such as a department, to which costs can be allocated or charged
Profit centre	A section of a business to which both costs and revenues can be allocated -so profit can be calculated

Resource summary

	Created by Chuka Munkh-Achit about 8 years ago