The process or activity on controlling costs associated with an activity, process, or company. Cost control typically includes
(1) Investigative procedures to detect
variance of actual costs from budgeted costs
(2) Diagnostic procedures to ascertain
the cause(s) of variance
&(3) Corrective procedures to effect realignment between actual and budgeted costs.
Marginal
cost
The increase or decrease in the total
cost of a production run for making one additional unit of an item. It is
computed in situations where the breakeven point has been reached: the fixed
costs have already been absorbed by the already produced items and only the
direct (variable) costs have to be accounted for. Marginal costs are variable costs
consisting of labor and material costs, plus an estimated portion of fixed
costs (such as administration
overheads and selling expenses). In companies where average costs are fairly constant, marginal cost is usually equal
to average cost. However, in industries that require heavy capital
investment (automobile plants, airlines, mines) and have high average costs, it
is comparatively very low. The concept of marginal cost is critically important
in resource allocation because, for optimum results, management must
concentrate its resources where the excess of marginal revenue over the
marginal cost is maximum. Also called choice cost, differential cost or
incremental cost.
Net
price
A
final price after deducting all discounts and rebates.
Vision
statement
An aspirational description of what an
organization would like to achieve or accomplish in the mid-term or long-term future. It
is intended to serves as a clear guide for choosing current and future courses
of action.
Opportunity
cost
A
benefit, profit, or value of something that must be given up to acquire or
achieve something else. Since every resource (land, money, time, etc.) can be
put to alternative uses, every action, choice, or decision has an associated
opportunity cost. Opportunity costs are fundamental costs in economics, and are
used in computing cost benefit analysis of a project. Such costs, however, are
not recorded in the account books but are recognized in decision making by
computing the cash outlays and their resulting profit or loss.
Austerity
budget
A budget that is imposed on a country by
its government with the purpose of reducing the national deficit by way of
cutting down on consumer spending.
Earmark
The act of setting something aside for a
specific use or purpose in the future. For example, goods may be earmarked
prior to being exported in the future. Most commonly used to refer to funds
that have been set aside in order to pay for a specific project.
Masters
of Business Administration (MBA)
An advanced college degree, earned by
those who successfully graduate from their college or university's MBA program.
As with other advanced degrees, traditionally a student will have already
received a Bachelors degree in some area of study, before working towards his or
her MBA. A typical MBA program deals with multiple aspects of business,
including finance and management skills. Also called Masters in Business
Administration or Master of Business Administration.
Yankee
bond
Dollar denominated bond sold in the US
by a foreign bank, corporation, or government utility. It the US equivalent of
Eurobond.
Tax
holiday
A
temporary period, during which time the government removes certain taxes
(usually sales tax) on certain items, in order to encourage the consumption or
purchase of these items. The most common application of this is a tax-free
weekend, which most states hold shortly before school begins in the fall,
during which time sales tax is removed on clothing,
school supplies, and/or other similar items. Not all areas engage in tax
holidays; it is up to the government of that area.
