| A | B |
|---|
| Administrative Cost | Expenses an organization incurs that are not directly tied to a specific function such as manufacturing, production or sales. |
| Benefits | Advantages or payments employees receive in addition to their wages (e.g., sick time, holiday pay, health insurance) |
| Cost of Production | The total amount of money spent on costs of materials, labor, taxes, etc., to manufacture economic goods and services. |
| Cost of Sales | The amount of money a business has paid for the product (good or service) it has sold. |
| Costs | The expenses involved with manufacturing, promoting, and distributing a product. |
| Professional Fees | Prices charged by individuals specially trained in specific fields of arts and sciences, such as doctors, architects, lawyers, and accountants. |
| Sales and Marketing Cost | All reasonable costs and expenses (including labor) that are attributable to the distribution, sale, promotion and marketing of a Product (including all pre-launch activities), calculated on a fully burdened basis, including Allocable Overhead attributable thereto. |
| Start-up Costs | All of the expenses involved in setting up a new business or introducing a new product to the market. |
| Technology Costs | Expenses associated with acquisition or development, implementation, deployment, and maintenance of technology assets, including depreciation of R&D equipment and amortization of know how. |
| Wages | Money payments for labor on an hourly, daily, or weekly basis. |
| Breakeven Point | The point at which a business’s total sales equal total expenses; the business has not yet made a profit but has not incurred any losses |
| Capital Expenditure | A one-time purchase a business makes (e.g., land, building, equipment) |
| Cost-Based Pricing | A pricing method in which the business adds a predetermined markup to the total cost of making the product |
| Depreciation | Loss of value |
| Economies of Scale | Cost savings created by increased levels of production |
| Fixed Costs | Operating costs that do not increase or decrease with changes in production |
| Gross Profit | A company’s revenue after subtracting the costs of the products it has sold |
| Mixed Costs | Expenses that are fixed until the company reaches a certain level of production, then become variable; also called semi-variable costs or semi-fixed costs |
| Operating Cost | The ongoing, day-to-day expenses of running a business that are not directly related to production |
| Price Markup | The difference between the total cost of a product and its selling price |
| Price-Based Costing | A pricing method in which the business determines how much customers will pay for a product, then adjusts costs accordingly |
| Sales Commission | An amount a salesperson earns per sale, either a percentage or a flat rate |
| Semi-Fixed Costs | Expenses that are fixed until the company reaches a certain level of production, then become variable; also called mixed costs or semi-variable costs |
| Semi-Variable Costs | Expenses that are fixed until the company reaches a certain level of production, then become variable; also called mixed costs or semi-fixed costs |
| Total Cost | The sum of the overhead and direct costs required to make a product |
| Variable Costs | Operating costs that fluctuate with changes in production |
| Contribution Margin | A product’s price minus all associated variable costs, resulting in the incremental profit earned for each unit sold |
| Cost of Goods Sold | The amount of money a business has paid for the goods it has sold |
| Gross Margin | A company’s net sales revenue minus its cost of goods sold (COGS) |
| Profit | Monetary reward a business owner receives for taking the risk involved in investing in a business; income left once all expenses are paid |
| Return on Investment (ROI) | A profit-oriented pricing objective in which the business bases the amount of profit it wants to earn on the amount of its capital investment |
| Revenue | The total amount of money earned by a business |
| Sales Commission | An amount a salesperson earns per sale, either a percentage or a flat rate |
| Sales revenues | Money that comes in to a business from the sale of goods and services; also called income from sales |
| Selling price | The amount a seller charges the purchaser for a good or service |
| Variable-cost margin | The amount of variable costs that apply to one unit; also called fixed-cost contribution |
| Examples of fixed costs | equipment lease, insurance, depreciation, taxes, wages and salaries, mortgage payments (among other) |
| Examples of variable costs | advertising, sales commission, raw materials, cost of goods for resale, shipping costs, sales tax (among others) |
| Examples of revenue items | merchandise sales, rental income, ticket sales (among others) |
| Calculation for Gross Profit | Sales-Cost of Goods Sold (COGS) |
| Calculation for Break-Even | Fixed Costs/ (Selling Price-Variable Cost per Unit) |
| Calculation for Return on Investment (ROI) | (Current Value of Investment-Cost of Investment)/Cost of Investment |
| Calculation for Mark-up (as a dollar amount) | Selling Price-Cost of Goods Sold (COGS) |
| Calculation for Mark-up (as a percentage | (Selling Price/Cost of Goods Sold)-1 |
