Glossary

Direct production costs

Production costs that can be assigned directly to a cost object.

Production overhead costs

Production costs that cannot be assigned directly to a cost object.

Production materials

All materials used to manufacture a product or to complete a process. These materials include raw materials and supplies.

Overhead costs

Costs that cannot be directly assigned to a cost object. Overhead costs are indirect costs.

Manufacturing costs

Costs associated with the production of a product. The manufacturing costs are given by the sum of material and production costs.

Manufacturing process

All necessary measures carried out to convert production factors into products.

Compatibility

For the purposes of this checklist, the compatibility between different systems, products or processes.

Direct material costs

Material costs that can be assigned directly to a cost object (product).

Material overhead costs

Material costs that cannot be assigned directly to a cost object.

Minimum requirements

As a rule, minimum requirements are specified for processes, whereas quality describes the product characteristics. A process that meets the necessary minimum requirements leads to a product of desirable quality.

Personnel efficiency

The ability of personnel to produce the desired quantity of products with the given materials. Personnel efficiency is the ratio of a specified goal having a defined quality to the expenditure (time, money, materials) needed by the personnel to reach that goal.

Product

A manufactured good or service.

Quality

The totality of features characterizing a product or service that bears its ability to satisfy stated or implied needs. It is essential that the customer's expectations are taken into consideration when assessing quality.

Quality standards and minimum requirement standards

These types of standard describe the essential characteristics and objective evaluation criteria necessary for the use of a material object. Such standards give consumers a sense of security, provide a clear guarantee of quality, and ensure market transparency.

Interface

That part of a system at which an exchange of information, energy or materials takes place.

Total production costs

Sum of all costs incurred for a cost object as a result of the performance process of a business. The total production costs comprise all costs incurred in the manufacture and sale of goods or services, including manufacturing costs, storage costs, sales overheads, direct sales costs, and administrative overheads.

Safety

A condition which is free of danger, risk or threat of harm.

System

Totality of elements that are interrelated in such a manner that they can be seen as a unit and thus can be differentiated from other elements.

Transaction costs

Costs incurred in trading goods or services or any kind of economic exchange (e.g. sales or purchases). Transaction costs are also those costs incurred when transacting rights of disposal (e.g. purchases, sales, rent).

Process

An ordered, repeatable sequence of actions or operations that can be broken down into several steps and is transparent to the observer. According to ISO 9000, a set of interrelated or interacting activities which transforms inputs into outputs.

Distribution costs

Costs that can be directly assigned to the distribution of a product. A differentiation is made between distribution overhead costs and special direct costs associated with distribution.

Administrative (overhead) costs

All administrative costs that cannot be assigned directly to a cost object. These are considered as overhead costs.

Willingness to pay (WTP)

The willingness of a customer to pay a certain price for a certain product.