Chua, Airah James D.

CMT1101-SEC 1

Define the following terminologies:

Cost
 In a business, cost expresses the amount of money that is spent on the production of a
goods and services.

Recipe Cost
 It is essentially calculating the cost incurred in preparing a particular dish.

Revenue
 It is the money of business generates. This includes sales, merchandise, consumer
packaged goods and more.

Profit
 It describes the financial benefit realized when revenue generated from a business activity
exceeds the expenses, costs, and taxes.

Expenses
 It is the cost of operations that a company incurs to generate revenue.
 Common expenses include payments to suppliers, employee wages, and equipment
depreciation.

Loss
 It occurs when a business has more expenses than earnings during accounting period.

Types of Cost

Fixed Cost
 Are costs that do not vary with the level of output in the short term.
Example of Fixed Cost
 Rent
 Salaries
 Advertising
 Insurance
 Depreciation

Variable Cost
 It varies in direct proportion with the level of output. Varying directly means that the total
variable cost will be totally dependent on the level of output.
Example of Variable Cost
 Direct labor
 Raw materials and components
 Packaging costs

Semi-variable Cost
 It is an expense, which includes a mixture of fixed and variable components. These costs
vary with output, but not in direct proportion.

Total Cost
 Are the sum of fixed costs, semi-variable costs and variable costs for any particular level
of output.

Direct Cost
 It is directly related to the output level of a particular product.

Indirect Cost
 It is related to the level of output of the firm, but not in a direct manner and not for any
one product.

References:

 https://www.reviso.com/accountingsoftware/accounting-words/cost/
 https://www.posist.com/restaurant-times/restro-gyaan/recipe-costing.html
 https://www.google.com/amp/s/pos.toasttab.com/blog/on-the-line/average-restaurant-revenue/amp
 https://www.investopedia.com/terms/p/profit.asp
 https://www.investopedia.com/terms/e/expense.asp
 http://textbook.stpauls.br/Business_Textbook/Operations_management_student/page_28.htm