prospective cost definition
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What are Prospective Costs? Prospective cost is a future expenditure or past cost that can be recovered. In other words, it is any cost that can be altered by your current or future decisions and strategies. Prospective costs are often contrasted with sunk costs, a past cost that can't be recovered. Business Cost Guide.
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Avoided Cost Short Run Avoided Cost is calculated to reflect the costs that would be displaced when a QFs makes a short term commitment to deliver energy. These costs are based upon the utility's marginal operating and shortage costs (i.e. the utility's instant costs to provide the power, or the spot market price).
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- prospective earnings/cost/yield, etc. › the amount that something is expected to earn, cost, produce, etc.: The study puts the prospective cost of annual repairs and renewals at $10 million. The shares are trading at 15 times forecast earnings with an attractive prospective yield of 5.2%.
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Definition Of Relevant Costs And Irrelevant Costs Such As Future Costs Accounting Essay Secondly, the term of relevant and irrelevant cost and revenues in decision making. Definition of relevant costs and irrelevant costs such as future costs, sunk costs and etc. The impact of relevant costs and revenues while organisation wish to improving making decision. The sunk costs effect while decision made related to risk.
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Prospective payment system Prospective payment system. A prospective payment system (PPS) is a term used to refer to several payment methodologies for which means of determining insurance reimbursement is based on a predetermined payment regardless of the intensity of the actual service provided. It includes a system for paying hospitals based on predetermined prices, from Medicare.
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Contract Management Body Of Knowledge (CMBOK): 1.6 Contracting Methods The range of prospective offers as determined by the buyer, which is based upon cost or price and other factors that were stated in the solicitation. The goal is to include all proposals that have a reasonable chance of being selected for award.
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INTRODUCTION TO CONTRACT PRICING (FINAL COST)Any cost that is identified specifically with a particular final cost objective. Direct costs are not limited to items that are incorporated in the end product as material or labor. Costs identified specifically with a contract are direct costs of that contract. Facilities Capital Cost of Money.
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What is a 'Direct Cost' DEFINITION of 'Direct Cost'. A price that can be completely attributed to the production of specific goods or services. Direct costs refer to materials, labor and expenses related to the production of a product.REAKING DOWN 'Direct Cost'. For example, the cost of meat in a hamburger can be attributed directly to the cost of manufacturing that product, as could the cost of packaging materials and preservatives. These are considered variable costs that are inconsistent and change amounts often.
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- DEFINITION of 'Acquisition Cost'. 1. The cost that a company recognizes on its books for property or equipment after adjusting for discounts, incentives, closing costs and other necessary expenditures, but before sales taxes. 2.
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- Overview of cost definitions and costing methods by James Ruth (jamesbennettruth@gmail.com) 1. Cost Definitions Cost: The total money, time, and resources associated with a purchase or activity. Fixed cost: Includes all costs that do not vary with activity for an accounting period.
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- A relevant cost (also called avoidable cost or differential cost) is a cost that differs between alternatives being considered. In order for a cost to be a relevant cost it must be: 1  Future.  Cash Flow.
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Relevant cost Relevant cost. A relevant cost (also called avoidable cost or differential cost) is a cost that differs between alternatives being considered. It is often important for businesses to distinguish between relevant and irrelevant costs when analyzing alternatives because erroneously considering irrelevant costs can lead to unsound business decisions. Also, ignoring irrelevant data in analysis can save time and effort.
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Cost-plus-incentive fee The basic elements of a CPIF contract are: 1  Target Cost: the estimated total contract costs. 2  Actual Cost: constitutes the reasonable costs that the contractor can prove he has made. 3  Target Fee: the basic fee to be paid if the Target Cost matches the Actual Cost (target profit).
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- Incremental Costs. Incremental costs are the additional costs expected to be incurred as a result of processing the product further or upgrading to increase its salability. Only if the company decides to process further will additional product costs be incurred. Incremental costs decrease profit.
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What does NPNstand for? We've got 36 definitions for NPN » What does NPN stand for? What does NPN mean? This page is about the various possible meanings of the acronym, abbreviation, shorthand or slang term: NPN.
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sunk cost Definition. Money already spent and permanently lost. Sunk costs are past opportunity costs that are partially (as salvage, if any) or totally irretrievable and, therefore, should be considered irrelevant to future decision making.his term is from the oil industry where the decision to abandon or operate an oil well is made on the basis of its expected cash flows and not on how much money was spent in drilling it. Also called embedded cost, prior year cost, stranded cost, or sunk capital.
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- Irrelevant Cost. What is an 'Irrelevant Cost'. An irrelevant cost is a managerial accounting term that represents a cost, either positive or negative, that does not relate to a situation requiring management's decision. As with relevant costs, irrelevant costs may be irrelevant for some situations but relevant for others.
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What is an 'Imputed Cost' Imputed Cost. What is an 'Imputed Cost'. An imputed cost is a cost that is incurred by virtue of using an asset instead of investing it or undertaking an alternative course of action. An imputed cost is an invisible cost that is not incurred directly, as opposed to an explicit cost, which is incurred directly.
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Cost-plus-incentive fee Cost-plus-incentive fee. A cost-plus-incentive fee (CPIF) contract is a cost-reimbursement contract that provides for an initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs.
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Actual Cost vs. Projected Cost Actual Cost vs. Projected Cost. Actual costs and projected costs are key components in a business budgeting system. Typically, small companies set budgets on an annual basis. Projected costs are based on prior sales numbers and anticipated increases in expenses. Actual costs result when money is actually spent on the various supplies, services and other expense categories used by the business.
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actual cost An actual amount paid or incurred, as opposed to estimated cost or standard cost. In contracting, actual costs amount includes direct labor, direct material, and other direct charges. You also might like... Jeffrey Glen.
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48 CFR 16.405-1 - Cost-plus-incentive-fee contracts. Application. A cost-plus-incentive-fee contract is a cost-reimbursement contract that provides for an initially negotiated fee to be adjusted later by a formula, which is based on the relationship of Total allowable costs to Total target costs.pplication. A cost-plus-incentive-fee contract is a cost-reimbursement contract that provides for an initially negotiated fee to be adjusted later by a formula, which is based on the relationship of Total allowable costs to Total target costs.
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- Accounting for Factors. With the prospective payment system, or PPS, the provider of health care, such as a hospital, receives one fixed payment for a particular type of care over a particular period of time. The system tries to make these payments as accurate as possible, since they are designed to be fixed. As a result, the formula to make the prospective payments is highly complex and accounts for many different factors, including statistical variance, teaching-related costs and other situations.
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- Ratemaking is prospective because the property and casualty insurance rate must be developed. prior to the transfer of risk. Principle 1: A rate is an estimate of the expected value of future costs. Ratemaking should provide for all costs so that the insurance system is financially sound.
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step fixed cost step fixed cost. A type of expense that is more or less constant over a low level shift in activity, but which changes incrementally when activity shifts substantially. An example of a step fixed cost that might be incurred by a manufacturing business would be the need to buy new production machinery to step production activity up another level.
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- Prospective vs. Retrospective Studies. A prospective study watches for outcomes, such as the development of a disease, during the study period and relates this to other factors such as suspected risk or protection factor(s). The study usually involves taking a cohort of subjects and watching them over a long period.