Service Department Costing
Shamsa Rafique Service Department Costing: After studying this chapter you should be able to: Difference between service department and operating department: Most of the large organizations have both operating departments and service…
Selecting Allocation Base
Selecting Allocation Base: Costs are ordinarily assigned to products and services by using a two stage process. In first stage, service department and other costs are allocated to operating departments.…
Target Costing Approach to Pricing
Sidra Farid Learning Objective of the Article: Define and explain target costing. Compute the target cost for a new product or service. What are advantages and disadvantages of target costing approach. In…
Overall or Net Factory Overhead Variance
Sana Ahmed Overall or Net Factory Overhead Variance: Definition: Overall or net factory overhead variance is the difference between actually incurred factory overhead and expenses charged into process using the standard factory…
System Normal Costing Definition
Normal Costing System Definition: Normal Costing system is a costing system in which overhead costs are applied to jobs by multiplying a predetermined overhead rate by the actual amount of…
Operating Leverage and Degree of Operating Leverage (DOL)
Definition and Explanation of Operating Leverage: A lever is a tool for multiplying force. Using a lever, a massive object can be moved with only a modest amount of force.…
Direct Materials Price and Quantity Standards
Abida Rehman Direct Materials Price and Quantity Standards: Learning Objective of the articles: Define and explain direct materials price standards and direct materials quantity standards. Explain how direct materials price and quantity…
Direct Materials Quantity Variance
Direct Materials Quantity Variance: Learning Objective of the articles: Define and explain "direct materials quantity variance" and its significance. How is it calculated? How direct materials quantity variance is interpreted?…
Direct Materials Price Variance
Direct Materials Price Variance: Learning Objective of the articles: Define and explain "direct materials price variance" and its significance. How is it calculated? How direct materials price variance is interpreted?…
Direct Labor Standards
Direct Labor Standards: Learning Objective of the articles: Define and explain "direct labor standards" . How direct labor rate and direct labor efficiency standards are set? Direct labor price and…
Limitations of Cost-Volume-Profit (CVP) Analysis
Limitations of Cost-Volume-Profit (CVP) Analysis: Cost volume profit (CVP) is a short run, marginal analysis: it assumes that unit variable costs and unit revenues are constant, which is appropriate for…
Direct Labor Rate | Price Variance rate
Direct Labor Rate | Price Variance: Learning Objective of the articles: Define and explain "direct labor rate | price variance /labour rate variance" . How direct labor rate or price…
Direct Labor Efficiency Variance
Direct Labor Efficiency Variance Learning Objective of the article: Define and explain "direct labor efficiency | usage variance" . How direct labor efficiency (labour analysis) or usage variance is calculated?…
Margin of Safety (MOS)
Margin of Safety (MOS): Learning Objectives: Define and explain margin of safety. Calculate margin of safety ratio. What is its significance/importance? Contents: Definition of Margin of Safety (MOS) Formula of…
Difference Between Gross Margin and Contribution Margin
Difference Between Gross Margin and Contribution Margin: Learning Objectives: What is the difference between gross margin and contribution margin? Gross Margin is the Gross Profit as a percentage of Net…
Assumptions of Cost-Volume-Profit (CVP) Analysis
Assumptions of Cost-Volume-Profit (CVP) Analysis: Learning Objectives: What are underlying assumptions of cost volume profit (CVP) analysis? A number of assumptions underlie cost-volume-profit (CVP) analysis: These cost volume profit analysis…
Cost Volume Profit (CVP) Relationship in Graphic Form
Cost Volume Profit (CVP) Relationship in Graphic Form: Learning Objectives: Prepare a CVP graph or breakeven chart. The relationships among revenue, cost, profit and volume can be expressed graphically by…
Cost Volume Profit (CVP) Formulas
Cost Volume Profit (CVP) Formulas: Contribution margin = Sales - Variable expenses (manufacturing and non-manufacturing) Net operating income = Contribution margin - Fixed expenses (manufacturing and non manufacturing) Contribution margin…