Glossary

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Some Terms used in these Materials

ABC	abbreviation for Activity-Based Costing, an alternative to traditional systems of cost accounting (see Unit 4)
Activity	in the Activity-Based Costing system this term is defined as any process or procedure that causes work to be done.
Actual costs	the exact amount spent in the past, as reflected in an institutionâl accounts, whether provisional or audited
Annualization	a method for calculating the decrease in the value of a capital asset based on simple depreciation and interest foregone, averaged over its working life
Appreciation	an increase in the value of a capital asset over its working life
Backflush costing	a rough measure of unit costs, calculated by using the Average Costs Equation. Backflush costing is appropriate where the ODL institution produces only a limited number of courses with uniform inputs and outputs.
Business-sustaining	residual overheads arising from activities that cannot be
Costs	Costs associated meaningfully with particular cost objects
Capital costs	any expenditure for things whose value continues to be used over more than one financial year. Examples of capital assets include buildings, furniture, equipment and courseware.
Committed costs	any expenditure (fixed or semi-variable) that cannot be eliminated or cut back without a major negative impact on the institutional objectives or profits
Cost absorption	the process whereby apportioned costs are attached to a particular product and are ultimately reflected in the price charged for it
Cost allocation	the process of assigning or attaching costs to the product or activity they belong to
Cost appointment	the process of dividing costs between two or more products in proportion to the estimated benefit received by each
Cost driver	anything that causes an overall increase (or decrease) in expenditure when it increases (or decreases)
Cost-effectiveness	measure of the of the costs incurred to produce a unit of output. In the context of ODL institutions, cost-effectiveness is normally expressed as the cost per graduate or examination subject/course pass.
Cost-effectiveness ratio	an expression of the relationship between the cost-effectiveness of one course, programme or mode of educational delivery relative to the cost-effectiveness of another
Cost object	term used in the Activity-Based Costing system to refer to the reason for carrying out an activity. Cost objects may be products, services or customers.
Cross-over point	the point on a graph of costs (either total or average) vs. student numbers corresponding to the particular level of enrolments where one mode of delivery becomes cheaper than another
Decision package	in a Zero-Based Budgeting system, this is a document that explains a proposed activity, its goals and objectives, what benefits are expected, how performance will be measured and all costs that will be incurred. In addition, a decision package should outline what alternative courses of action have been considered and why these were rejected.
Depreciation	a decrease in the value of a capital asset over its working life
Direct cost	any expenditure that can be directly related to a particular product or service.
DTP	abbreviation for desk-top publishing for use of a desk-top computer to design and lay out print-based materials to a standard suitable for printing
Economy of scale	a situation where the cost of producing an additional unit of output of a good or service decreases as the volume of output (the scale of production) increases.
Effectiveness	the extent to which an ODL institution or programme produces outputs that meet its own goals (internal effectiveness) or the broader goals of society as a whole (external effectiveness)
Efficiency	the extent to which an ODL institution or programme keeps up the same level of outputs with fewer resources (economic efficiency) or increases the level of outputs with the same amount of resources (production efficiency)
Efficiency ratio	the relationship between the efficiency factor (total costs divided by number of students or course/subject enrolments) of an ODL programme and the efficiency factor for a comparable programme delivered through conventional means. This measure can also be used to compare two different ODL programmes using different media (e.g. print-based materials vs. TV broadcasts)
Fixed cost	any expenditure that does not increase or decrease with changes in the level of activity or product produced
FT	full-time, referring to students in conventional schools, colleges or universities
FTE	full-time equivalency/equivalent, used to refer to measures that enable comparison of ODL students and courses with those in conventional education
FY	abbreviation for Financial Year
Indirect cost	any expenditure that CANNOT be directly related to a particular product or service. Indirect costs are often referred to as Overheads
ICTs	information and communication technologies
Managed costs	expenditure that can be reduced or postponed without an immediate major disruption to the institution or programme
Marginal cost	the additional expenditure incurred to produce one more unit of a product or service, for example, the cost of accommodating each student in addition to the number in cost projections for a course
Mean value	another term for the average value. The arithmetic mean is calculated by adding together all of the values for a particular variable (e.g. prices charged for an item at different stores) and dividing by the total number of cases (stores) in your sample.
Median value	the middle value for a particular variable, when all of the values are placed in rank order from lowest to highest. The median is the actual value that appears at the midpoint of this series. Half of the remaining cases will be higher than and the other half lower than the median.
NGO	non-governmental organisation
Non-recurrent	either income or expenditure that happens only once and does not recur every year
notional	ideal or average figures that are used to estimate future income or expenditure
ODL	open and distance learning
Operating costs	any expenditure for things whose value is consumed within the same financial year. Examples of operating costs include staff salaries, printing costs, leasing of buildings or vehicles, consultancy services.
Overheads	another term for Indirect Costs
Productivity factor	the amount of output (in terms of goods or services) created per unit of input used
Range	the level of productive activity within which a semi-variable cost remains fixed
Recurrent	either income or expenditure that recurs every year
Revenue costs	another name for Operating Costs, so-called because such expenditure is normally met through income (revenue) for the business in the current financial year
Ring-fenced	funding that has been given on the condition that it be used only for a specified purpose
Scale	the number of students enrolled for a particular course
Scope	the number or range of courses/subjects offered by an ODL institution
Semi-variable cost	any expenditure that is fixed within a given range of activity, but increases in a step-like fashion when the activity exceeds the given range
Simple depreciation	a method for calculating the decrease in value of a capital asset based on the assumption that equal amounts of its value are used up each year of its working life
Social discount	a method for calculating the decrease in the value of a capital asset based on simple depreciation and interest on the un-depreciated value of the asset, which changes over the its working life
Study guide	print-based, self-instructional materials usually bound in the form of a booklet. Also referred to as a workbook or "block"
Taxonomy	A scheme for classifying things, in this case, cost objects
Total costs	the sum of fixed costs, variable costs and semi-variable costs
Unit cost	all expenditure associated with the production of a single, measured amount of a product or service
Variable costs	any expenditure that varies in proportion to a change in the level of activity or product produced
Written down value	a notional figure used in calculations of depreciation to represent the residual, un-depreciated value of a capital asset at the end of each year of its working life