Cost Descriptors

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This paper will clarify the various terms used to describe costs, such as fixed, variable, direct, indirect, and sunk, giving examples of each to help a good understanding of current budget discussions. These concepts will help HR Management with an understanding of making effective budget decisions for its company, since they need to have clear and full knowledge of basic accounting language to grasp the concepts of the various accounting terms.
The term cost can be defined as the amount to be paid for products or services or a required payment for purchasing products and services used as a constant during a period. Costs can have different definitions, based on what kind of use it is required. They can be considered fixed
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The profitability is not high, but at least, the fixed costs will be paid and maybe some profitability will be achieved.
Opportunity Costs are used to measure the costs of the resources. They can be defined as the cost of an alternative that must be forgone in order to pursue a certain action, or the benefits received by taking an alternative action, or, still, the difference in return between a chosen investment and one that was passed up. As example, the benefit of studying a MBA and spending money on it or save the money for future expenses, or better saying, using the money to pay expenses in daily basis.
Various terms are used to describe costs. Having an understanding of these terms will provide a better insight to managers and companies on making budget decisions, efficiently. Not only the ones described above should be considered, but also all types of costs related to the decision in effect. Efficient managers will considered all aspects related to the analyses in question.
References Investment Dictionary. Copyright ©2000, - Owned and Operated by Investopedia Inc. Retrieved August 10, 2008 from
Arkes, Hal & Blumer, C. (1985). The Psychology of Sunk Cost, Organizational Behavior and Human Decision

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