Absorption Costing
DefinitionTotal absorption costing is a method of Accounting cost which entails the full cost of manufacturing or providing a service. TAC includes not just the costs of materials and labour, but also of all manufacturing overheads. The cost of each cost center can be direct or indirect. The direct cost can be easily identified with individual cost centers. Whereas...
Absolute Beneficiary
What is 'Absolute Beneficiary' A designation of a beneficiary that can not be changed without the written consent of that beneficiary. Also referred to as an "irrevocable beneficiary", absolute beneficiaries can also refer to a trust, an employee benefit plan such as a pension, or any other instrument or contract with a beneficiary clause. Explaining...
Asset Allocation
DefinitionAsset allocation is the rigorous implementation of an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. The focus is on the characteristics of the overall portfolio. Such a strategy contrasts with an approach that focuses on...
Accelerated Reply Mail (ARM)
What is 'Accelerated Reply Mail - ARM' An expedited delivery of business reply mail offered by the U.S. Postal Service. Reply mail may be routed to a postal facility other than the one to which the mail is addressed, and is available for pickup by the ARM customer, or reshipped by express mail to the customer. The...
Abatement Costs
What is 'Abatement Cost' A cost borne by many businesses for the removal and/or reduction of an undesirable item that they have created. Abatement costs are generally incurred when corporations are required to reduce possible nuisances or negative byproducts created during production. Explaining 'Abatement Cost' Examples of abatement costs would be the pollution reduction...
Abeyance Order
What is 'Abeyance Order' An order that is temporarily placed on hold or held in suspension, due to prevailing circumstances, until it can be fulfilled. In advertising, an abeyance order refers to an order from an advertiser for a media slot on television or radio that is temporarily unavailable. As a result, the order may be held...
Abandonment Option
What is 'Abandonment Option' A clause granting parties the option of withdrawing from the contract before the fulfillment or completion of all contractual duties. This clause adds value by giving the parties the ability to end the obligation if it is unprofitable. Explaining 'Abandonment Option' Abandonment options are commonly used in bilateral agreements without a...
Absolute Rate
What is 'Absolute Rate' The fixed portion of an interest-rate swap, expressed as a percentage rather than as a premium or a discount to a reference rate. Explaining 'Absolute Rate' The absolute rate is a combination of the reference rate and the premium or discounted fixed percentage. For example, if the LIBOR is 3%...
Absentee Owner
What is 'Absentee Owner' An individual who owns a piece of real estate but does not live in it. An absentee owner may also be an entity such as a corporation or real estate investment trust (REIT). The real estate held by an absentee owner can range widely - while an individual may own a single condominium...
Above-The-Line Costs
What is 'Above-The-Line Costs' Costs incurred during the production of an advertising commercial that are associated with the creative side of it. These costs include those incurred for actors, music and photography. Because creativity cannot be measured directly, above-the-line costs may have little correlation with the creativity of an advertisement or commercial. That is, incurring high above-the-line...