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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: 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: 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: 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): 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: 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): 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: 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 is a single predetermined overhead rate that is used throughout a plant.
Trend Analysis Definition: Trend analysis is a side-by-side comparison of two or more years' financial statements.
Variable Cost Definition: Variable cost is a cost that varies, in total, in direct proportion to changes in the level of activity. A variable cost is constant per unit.
Cost Classifications for Predicting Cost Behavior (Variable and Fixed Cost): Learning objectives of this article: Define and explain variable cost and fixed cost. Give examples of variable and fixed costs.…
Planning Definition: Selecting a course of action and specifying how the action will be implemented.
Retiring of a Bill of Exchange: Learning Objectives: Make journal entries in the books of drawer and drawee when a bill of exchange is retired before it maturity. Definition and…
Absorption costing vs Variable costing: Learning Objectives: Define and explain variable and absorption costing. Explain the difference between variable and absorption costing and calculate unit product cost under each method.…
Transfer of Materials Cost to Finished Production--Inventory Valuation: The ultimate, intended destination of direct materials is finished products or finished goods delivered to customers. The cost of materials used on…
Retainer Fee Approach Definition: A method of allocating service department costs in which other departments are charged a flat amount each period regardless of usage of the service involved.
Standard Cost Method Definition: Standard Cost Method method charges issued materials at a predetermined or estimated price reflecting a normal or an expected future price. The difference between the actual…
Sana Ahmed 
Rubab Ali 
Shamsa Rafique 
Sidra Farid 
Abida Rehman