Finance Management

Sunk cost (also understood as retrospective cost) in which an amount already incurred and can not be recovered. Sunk costs are independent of any event and should not be deemed when making investment or project decisions.

Marginal (Incremental) cost is the cost incurred due to an additional unit of a product being produced.

Opportunity cost is the value of the next-best alternative when a decision is made to proceed with one alternative.

An outlay cost is an amount that a company expends on a particular project. Outlay costs for a new project can include the cost of setup, cost of production, and cost of asset (machinery, office equipment, etc) purchase. Outlay costs…

Indirect costs are the costs that can not be readily determined with a specific activity but are incurred for the joint benefit of company/project activities.

Direct cost is a type of cost associated with the production of specific goods or services. The cost of any material which directly used to produce a product/service can be considered a direct cost.

Variable costs are expenses that the amount depending on the volume of goods or services produces. In simple terms, variable cost is changing based on the production/service output quantity/volume.

Fixed cost is a type of cost that does not change with an increase or reduction in production quantity. The company has to pay the fixed cost despite the number of units produced.

In economic terms, the marginal cost is the increase in total production cost when producing one additional unit.