Variance Definition
Sana Ahmed Variance Definition: The difference between standard prices and quantities on the one hand and actual prices and quantities on the other hand.
Variance Analysis and Management By Exception
Variance Analysis and Management By Exception: Variance analysis and performance reports are important elements of management by exception. Simply put, management by exception means that the manager's attention should be…
Trend Percentage
Sidra Farid Trend Percentage: Definition and Explanation: Horizontal analysis of financial statements can also be carried out by computing trend percentages. Trend percentage states several years' financial data in terms of a…
Return on Investment (ROI) and Balanced Scorecard
Abida Rehman Return on Investment (ROI) and Balanced Scorecard: Simply exhorting managers to increase return on investment (ROI) is not sufficient. Managers who are told to increase return on investment (ROI) will…
Variable Spending Variance Definition
Variable Spending Variance Definition: The difference between the actual variable overhead cost incurred during a period and the standard cost that should have been incurred based on the actual activity…
Variable Overhead Efficiency Variance Definition
Variable Overhead Efficiency Variance Definition: The difference between the actual activity (direct labor-hours, machine-hours, or some other base) of a period and the standard activity allowed, multiplied by the variable…
Variable/Direct/Marginal and Absorption Costing Discussion Questions and Answers
Variable/Direct/Marginal and Absorption CostingDiscussion Questions and Answers: Questions: Differentiate between direct costs and direct costing. See answer. Distinguish between period costs and product costs. See answer. Why does the direct…
Return on Equity Capital (ROEC) Ratio
In real sense, ordinary shareholders are the real owners of the company. They assume the highest risk in the company. (Preference share holders have a preference over ordinary shareholders in…
Limitations of Variable Costing – GAAP and External Reports
Limitations of Variable Costing - GAAP and External Reports: Learning Objectives: What are the limitations of variable costing? Is variable costing acceptable for external reports? Do financial statements prepared under…
Positive Financial Leverage Definition
Rubab Ali Positive Financial Leverage Definition: Positive financial leverage is a situation in which the fixed return to a company's creditors and preferred stockholders is less than the return on total assets.…
Standard Cost Per Unit Definition
Shamsa Rafique Standard Cost Per Unit Definition: The standard cost of a unit of product as shown on the standard cost card; it is computed by multiplying the standard quantity or hours…
Transfer Pricing Definition
Transfer Pricing Definition: The price charged when one division or segment provides goods or services to another division or segment of an organization.
Return on Capital Employed Ratio (ROCE Ratio)
Return on Capital Employed Ratio (ROCE Ratio): The prime objective of making investments in any business is to obtain satisfactory return on capital invested. Hence, the return on capital employed…
Variable Costing Definition
Variable Costing Definition: A costing method that includes only variable manufacturing costs–direct materials, direct labor, and variable manufacturing overhead–in unit product cost. Variable costing is also called marginal costing and…
Variable Costing and Theory of Constraints (TOC)
Variable Costing and Theory of Constraints (TOC): The Theory of Constraints (TOC) focuses on managing constraints in a company as the key to improving profits. Companies involved in Theory of…
Return on Shareholders Investment or Net Worth Ratio
Return on Shareholders Investment or Net Worth Ratio: Definition: It is the ratio of net profit to share holder's investment. It is the relationship between net profit (after interest and…
Plant Wide Overhead Rate Definition
Plant Wide Overhead Rate Definition: Plant wide overhead rate is a single predetermined overhead rate that is used throughout a plant.
Trend Analysis Definition
Trend Analysis Definition: Trend analysis is a side-by-side comparison of two or more years' financial statements.