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Factory Overhead Controllable Variance: Learning Objective of the article: Define and explain factory overhead controllable variance. How FOH controllable variance is calculated? What are the reasons / causes of unfavorable…
Budget Variance Definition: A measure of the difference between the actual fixed overhead costs incurred during the period and budgeted fixed overhead costs as contained in the flexible budget.
Functions of Accounting (accounting functions): Learning Objectives: What are the important functions of accounting? Record Keeping Function: The primary function of accounting is to keep a systematic record of financial…
Control Definition: Control is the process of instituting procedures and then obtaining feedback to ensure that all parts of the organization are functioning effectively and moving toward overall company goals.
Full Costing Definition: Full costing is a costing method that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - as part of the…
Budget Definition: Budget is a detailed plan for the future, usually expressed in formal quantitative terms.
Contribution Margin (CM) Ratio Definition: The contribution margin as a percentage of total sales is called contribution margin ratio. Contribution margin ratio = Contribution margin / Sales Click here to…
Form of Ledger and Method of Posting: Form of Ledger: One account usually occupies one page in the ledger. But if the account is big one it may extend to…
Budget Committee Definition: A group of key management persons who are responsible for overall policy matters relating to the budget program and for coordinating the preparation of the budget.
Cost Flow and Journal Entries--Process Costing System: Materials: Materials are drawn from the storeroom using a material requisition form. Materials can be added in any department, although it is not…
Flexible Budget Definition: A budget that is designed to cover a range of activity and that can be used to develop budgeted costs at any point within that range to…
Contribution Margin Definition: Contribution margin is the amount remaining from sales revenues after all variable expenses have been deducted. Contribution Margin = Sales Revenue – Variable Cost Click here to…
Flexible Budget Definition: A budget that is designed to cover a range of activity and that can be used to develop budgeted costs at any point within that range to…
Fixed Overhead Efficiency Variance: Learning Objective of the article: Define and explain fixed overhead efficiency variance. How is fixed overhead efficiency variance calculated? What are the reasons / causes of…
Contribution Approach Definition: Contribution approach is an income statement format that is geared to cost behavior in that costs are separated into variable and fixed categories rather than being separated…
Budget Committee: Learning Objective of the Article: What is a budget committee? What are the functions and responsibilities of a budget committee? Definition: Budget committee is a group of key…
Price Earnings Ratio (PE Ratio): Definition: Price earnings ratio (P/E ratio) is the ratio between market price per equity share and earning per share. The ratio is calculated to make an estimate of appreciation…
Continuous or Perpetual Budget Definition: A 12-month budget that rolls forward one month as the current month is completed.
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