BUS 371 CH 6 KEY TERMS

Question	Answer
Absorption costing	A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in unit product costs.
Common fixed cost	A fixed cost that supports more than one business segment, but is not traceable in whole or in part to any one of the business segments.
Segment	Any part or activity of an organization about which managers seek cost, revenue, or profit data.
Segment margin	A segment’s contribution margin less its traceable fixed costs. It represents the margin available after a segment has covered all of its own traceable costs.
Traceable fixed cost	A fixed cost that is incurred because of the existence of a particular business segment and that would be eliminated if the segment were eliminated.
Variable costing	A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

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