GLOSSARY of Costing & Management Accounting Terms – Alphabet C


Capacity ratio

Actual number of hours worked divided by budgeted standard hours. The ratio is expressed as a percentage

Carrying costs

Costs incurred in keeping stocks such as storage costs, insurance and cost of money tied up in stocks.

Common costs

Also known as joint costs. They are costs incurred prior to the split off point.

Continuous budget

Also known as rolling budget. It is a budget which adds a period in the future as the period just ended is completed.

Contract costing

A costing method which is applied to work that are constructional in nature and takes a long time to complete


The difference between the sales value and marginal cost

Contribution margin

This is the margin that results when variable production costs are subtracted from revenue. It is most useful for making incremental pricing decisions where a company must cover its variable costs, though perhaps not all of its fixed costs.

Contribution sales ratio

Contribution divided by sales. It shows the rate at which profit is made. Also referred as profit volume ratio

Controllable costs

Costs that are influenced by decision or action of a manager

Control period

The period in which control is exercised

Conversion cost

The total of direct labor, direct expenses and production overhead

Cost allocation

The assigning or distribution of costs to cost centres

Cost apportionment

Costs applied to cost centres are shared fairly by the cost centres

Cost centre

A section of a business for which costs can be accumulated

Cost ledger

A book in which cost accounts are kept

Cost plus pricing

Prices are set by adding a percentage mark-up for profit to the total cost of the product.

Cost sheet

Also known as cost card or cost statement. It is a basic document for collecting cots of a cost centre or cost unit

Cost unit

The quantitative unit of product or service in relation to which costs can be ascertained.

Cost unit rate

Estimated overheads divided by the number of cost units to be produced

Cost driver

This is a factor that directly impacts the incidence of a cost, and which is generally based on varying levels of activity.

Cost object

This is an item for which a cost is compiled. For example, this can be a product, a service, a project, a customer, or an activity

Cost pool

A cluster of cost items.

Costing period

The period for which costs are ascertained

Current standard

Standard set for use over a short time period and it represents current conditions.

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