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What is a Applied Cost?

 , December 04, 2015
Applied cost is a term to denote a cost that has been estimated or partially estimated.
It is common for costs such as overhead to be estimated for the purposes of decision making. For example, if you want to model the profitability of a new product you need to make approximations for overhead costs such as the operation of a factory, marketing and the administrative functions of an organization.
Business cases are typically constructed with applied costs. In many cases, applied costs are also used in financial accounting. In such cases, the difference between applied costs and actual costs may be calculated at a later point and treated as a cost variance.
Overview: Applied Cost
TypeBusiness Costs
DefinitionAn estimate of costs that is used when actual costs are unknown or partially unknown.
ValueMaking decisions and modeling finances based on the best information available at a point in time.
Related ConceptsManagement Accounting

Business Costs

This is the complete list of articles we have written about business costs.
Business Equipment
Capital Improvement
Fixed Costs
Friction Cost
Holding Costs
Intangible Cost
Operating Cost
Operating Expenses
Outlay Cost
Overhead Costs
Relevant Cost
Tangible Cost
Travel Expenses
Variable Costs
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