The Average Cost Curve (ACC) in the long run represents the average cost per unit of output, taking into account the optimal production technology and scale. It is crucial for understanding economies of scale and business optimization.
A cost unit represents a unit of production for which costs are aggregated. It can vary from a single item like a chair or light bulb to a sub-assembly in more complex products like an aircraft wing or gearbox. In cases where individual unit costs are minimal, cost units might be expressed as batches.
The cost per unit of production that a firm sustains at varying levels of output.
Labor and materials that can be identified physically in the product produced. Direct costs for an apartment building, for example, are construction materials and labor; indirect costs include architect's fees, interest during construction, insurance, and builder's overhead and profit allowance.
Indirect materials cost refers to the expenses incurred in providing materials that are not directly traceable to a specific product or job but are necessary for the manufacturing process.
A manufacturing account, or manufacturing statement, is an accounting statement forming part of the internal final accounts of a manufacturing organization; for a particular period, it is constructed to show direct cost of sales, manufacturing overhead, total production cost, and cost of goods manufactured. In some cases, a manufacturing profit is also computed.
The cost to a manufacturing company of making a product, consisting of direct materials, direct labor, and factory overhead; also called manufacturing expense.
The manufacturing cost of finished goods refers to the total expense incurred to produce a finished product. This includes the direct materials, direct labor, and manufacturing overhead costs associated with the production process.
The total of all the costs incurred in producing a product or cost unit. In a manufacturing account, the production cost is represented by the total of the direct cost of sales and the manufacturing overhead.
Total cost of production is a term used to refer to the overall expense incurred by a company to manufacture a product or provide a service. It includes both fixed and variable costs.
The Total Standard Cost is the sum of the Total Standard Production Cost and the Standard Cost Allowance for non-production overhead, which provides a comprehensive measure of the standard expenses incurred during the production process.
An essential measure in economics and business that calculates the cost of labor required to produce one unit of a good or service.
