Explain the Difference Between a Cost, a Cost Object, and a Cost

question 124

Essay

Explain the difference between a cost, a cost object, and a cost pool.

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Definitions:

Variable Manufacturing Overhead

These are costs that vary with production volume, such as utilities for the production plant or materials.

Net Operating Income

The total revenue from operations minus the operating expenses, exclusive of taxes and interest, in a different phrasing.

Variable Manufacturing Overhead

Costs of manufacturing that vary directly with the level of production, such as utilities for the manufacturing plant.

Break-even Sales

The amount of revenue needed to cover all fixed and variable costs, resulting in neither profit nor loss.