Planned Special Events: Cost Management and Cost Recovery Primer
Glossary
Activity-Based Costing – A method of allocating indirect costs in which the cost of resources consumed is assigned to the activity consuming the resource.
Asset Management – The practice of taking a comprehensive view of the entire portfolio of resources available in order to achieve system-wide agency goals at optimal cost benefit. This includes the ability to show how, when, and why resources were committed.
Cost Analysis – The gathering of various cost tracking information to prepare reports which can be reviewed to determine the nature and relationship of the cost elements.
Cost Driver – The activity that is the best indicator of cost.
Cost Management – Effective, overarching control of an organization's finances across multiple stages.
Cost Objective – A cost objective, also called the cost object or cost target, is the good or service being provided. All costs should be assigned to cost objectives. Costs are allocated to the cost objectives that benefit most from incurring the cost.
Cost Planning – Activities such as cost estimating, forecasting, and budgeting.
Cost Recovery – Charging users of a service for that service, rather than the organization absorbing the cost.
Cost Tracking – Following the costs of various activities through the cost management system, relying upon the use of discrete coding of activities and their associated costs. Discrete coding includes methods such as time collection (the use of personnel time sheets) and expense accumulation.
Direct Costs – Costs that are directly linked to a specific service, activity, or department. Direct costs can be identified specifically with a particular final cost objective.
Fixed Cost – Costs that do not vary with increases and decreases in activity.
Indirect Costs – Costs that are not directly linked to a specific service, activity or department. Indirect costs are incurred for a common or joint purpose and may either benefit more than one cost objective or not be readily assignable to the cost objectives specifically benefited without effort disproportionate to the results achieved.
Mixed or Semi Variable Cost – Costs that contain both a variable cost element and a fixed cost element. These costs may vary incrementally with increases and decreases in activity.
Resource Utilization – Examining resources to ensure optimal allocation. Restructuring shifts so that police work fewer overtime hours is an example of resource utilization.
Variable Costs – Costs that vary with increases and decreases in activity.
Cost Pool – The accumulation of costs whose total is allocated using one allocation base, such as a cost driver.
