Archives: Terms

Definition of Economic Costs Economic costs encompass both explicit and implicit costs associated with a business’s operations. Explicit costs, also known as accounting costs, are direct, out-of-pocket payments made for wages, rent, materials, and other tangible expenses. Implicit costs, on the other hand, represent the opportunity costs of utilizing resources […]

Definition of Cost Schedule A cost schedule is an organized presentation of the various costs associated with a business operation or production process over a specific time period. It typically details the costs incurred at different levels of output or activity, helping organizations to understand how expenses change as the […]

Definition of Cost of Protection Cost of protection refers to the economic and sometimes non-economic price paid by a society, a sector, or an individual as a consequence of policies intended to shield domestic industries from foreign competition. This protection can come in various forms, including tariffs, quotas, and subsidies […]

Definition of Cost of Living Index The Cost of Living Index (COLI) is a theoretical price index that measures the relative cost of living over time or geographic areas. It is an indicator of the changes in the amount of money people need to cover basic expenses such as housing, […]

Definition of Cost of Capital Cost of capital refers to the cost of obtaining funds, either through debt, equity, or a combination of both, to finance an organization’s projects and operations. It represents the return that a company needs to achieve in order to justify the cost of a capital […]

Definition of Cost Minimization Cost minimization is a fundamental strategy in economics and business management, aimed at reducing input costs while maintaining the desired level of output or productivity. Essentially, it involves finding the most cost-effective way to produce goods or services without compromising on quality. Cost minimization strategies are […]

Definition of Cost Inflation Cost inflation refers to the sustained increase in the prices of goods and services, primarily due to the rising costs of production. These production costs can include wages, raw materials, and other inputs. Unlike demand-pull inflation, where prices rise due to an increase in demand, cost-push […]

Definition of Cost Function A cost function is a mathematical formula used by businesses to determine the total cost of production based on various inputs. It takes into account all the expenses involved in the manufacture of a product or provision of a service, including costs related to labor, materials, […]

Definition of Cost Centre A Cost Centre is a specific part of an organization where costs can be identified and directly charged. This includes departments or sections of a business that do not directly generate revenue but incur costs. By tracking these costs separately, organizations can better control and manage […]

Definition of Cost Accounting Cost accounting is a branch of accounting focused on the recording, classification, analysis, and summarization of costs associated with producing a product or offering a service. It is designed to help businesses understand their operational expenses in detail and thus make informed managerial decisions to optimize […]