| A | B |
|---|
| Average costs | Total production and service costs divided by the quantity of production. |
| Avoidable costs | The hospitality operation does not incur these costs when it shuts down. |
| Capacity fixed costs | These fixed costs are related to the physical plant or the capacity to provide goods and services to the guests. |
| Controllable costs | A manager is able to exercise judgement over these costs. |
| Cost allocation | This process distributes costs among the operated departments. |
| Fixed costs | Remain constant in the short run and do not vary with sales volume. |
| Discretionary fixed costs | Managers may choose to avoid incurring these costs during the short run. |
| Variable costs | These costs change proportionally with the volume of business. |
| Step costs | These costs are constant within a range of activity but different among ranges of activity. |
| Mixed costs | Costs that are partly fixed and partly variable |
| Total costs | The sum of total fixed costs and total variable costs. |
| High low two-point method | The simplest approach to separating mixed costs into their fixed and variable parts. |
| The scatter diagram method | Used to separate mixed costs into their fixed and variable components. Plots data on a graph and draw a line between data points. |
| Regression Analysis | Used to separate mixed costs into their fixed and variable elements. Uses a mathematical approach to fit a straight line to data. |
| Indifference point | The level of activity at which the period cost is the same under either arrangement. |
| Overhead costs | All costs other than the direct costs incurred by the profit centers. |
| SABA | Uses a single allocation base to allocate overhead costs to profit centers. |
| MABA | Uses a multiple allocation base to allocate overhead costs to profit centers. |
| Relevant costs | Costs you should consider in the decision-making process. |
| Incremental costs | The cost you incur to produce one more unit of goods or service. |
| Differential costs | Costs that differ between two alternatives. |
| Standard costs | Forecasts of what costs should be under projected conditions. |
| Sunk costs | Past costs relating to past decisions. |
| Opportunity cost | The cost of the best alternative opportunity you give up in a decision-making situtation involving several alternatives. |
