GLOSSARY of Costing & Management Accounting Terms-Alphabet P


Period costs

Costs treated as costs of the period

Prime cost

the total cost of direct material, direct labor and direct expenses

Prime cost percentage rate

Estimated overhead divided by the estimated prime cost. The result is expressed as a percentage.

Process costing

A costing method applied where a product passes through many separate stages of manufacture. There is a continuous flow of identical products.

Product cost

Cost assigned to products and services

Production cost

Cost that is incurred in manufacturing goods. It is prime cost plus absorbed production overhead

Production volume ratio

Actual production in standard hours divided by budgeted standard hours. The result is expressed in percentage.


Sales minus total cost. It is also contribution minus fixed cost. Also referred as income

Profit on contracts

Also called attributable profit. It is that proportion of the total currently estimated profit on the contract which is relative to the work done at the accounting date.

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