Költségelny

Költségelny is a Hungarian term that translates to "cost absorption" or "cost coverage" in English. It refers to the process by which a business or organization ensures that its expenses are met by its revenues or other income streams. This concept is fundamental to financial management and is a key indicator of a company's profitability and sustainability.

In practice, cost absorption involves identifying all direct and indirect costs associated with producing goods or services and then determining how these costs will be recouped through the selling price of those goods or services. For a business to be successful, its total revenue must at least equal its total costs, a point known as the break-even point. Anything above this point represents profit, while falling short means incurring a loss.

Various accounting methods are used to track and manage cost absorption. These can include cost accounting systems that allocate overhead costs to products, as well as budgeting and financial forecasting to predict future revenues and expenses. Effective cost absorption strategies are crucial for pricing decisions, resource allocation, and overall business planning. It ensures that the company can continue to operate and invest in its future without depleting its financial resources. The ability to absorb costs effectively is a direct measure of operational efficiency and financial health.