is chosen in preference to an alternative.

The opportunity cost is represented by the

foregone potential benefit from the best
rejected course of action.
cost, overhead/indirect Expenditure
on labour, materials or services that
cannot be economically identified with
a specific saleable cost unit.
The synonymous term burden is
in common use in the US and in
subsidiaries of American companies.
cost, period Cost relating to a time period
rather than to the output of products or
services.
cost pool Grouping of costs relating to a
particular activity in an activity-based
costing system.
cost, post-purchase Cost incurred after a
capital expenditure decision has been
implemented and facilities acquired. May
include training, maintenance and the cost
of upgrades.
cost, prime Total cost of direct material,
direct labour and direct expenses.
cost, product Cost of a finished product
built up from its cost elements.
cost, production Prime cost plus absorbed
production overhead.
cost, replacement Cost of
replacing an asset. This is important in
relevant costing because if, for example,
material that is in constant use is needed
for a product or service, the relevant cost
of that material will be its replacement
cost. Replacement cost has also been
proposed as an alternate to historic cost
accounting and it can, therefore, be
an important concept with relevance
to accounting for inflation or measuring
performance where the value of assets is
important.
cost, semi-variable Cost containing both
fixed and variable components and thus
partly affected by a change in the level of
activity.
cost, standard Planned unit cost
of a product, component or service. The
standard cost may be determined on
a number of bases (see standard). The
main uses of standard costs are in
performance measurement, control, stock
valuation and in the establishment of
selling prices. See standard product
specification.
cost, sunk Cost that has been irreversibly
incurred or committed and cannot
therefore be considered relevant to a
decision. Sunk costs may also be termed
irrecoverable costs.
cost table Database containing

costs associated with production of a

product, broken down by function
and/or components and sub-assemblies.
It incorporates cost changes that would
result from possible changes in the
input mix.
cost, target Product cost estimate
derived by subtracting a desired
profit margin from a competitive market
price.
cost unit Unit of product or service in
relation to which costs are ascertained.
See Figure 1.16.
cost, variable Cost that varies with a
measure of activity.
cost, weighted average Method
of unit cost determination, often
applied to stocks, in which an average
unit cost is calculated, when a new
purchase quantity is received:
See Figure 1.17.
cost-benefit analysis Comparison betwe
the costs of the resources used plus any
other costs imposed by an activity (for
example pollution, environmental
damage) and the value of the financial
and non-financial benefits derived.
costing, backflush Method of costing,
associated with a JIT (just-in-time)
production system, which applies cost
Cost of opening stock  Cost of acquisitions
Total number of units