Predetermined Overhead Rate and Capacity: Companies typically base their predetermined overhead rates on the estimated, or budgeted, amount of allocation base for the upcoming period. This is the method that is used in this chapter, but it is practice that is recently come under
Practical Standards Definition: Standards that allow for normal machine downtime and other work interruptions and that can be attained through reasonable, though highly efficient, efforts by the average worker.
Postaudit Definition: The follow-up after a project has been approved and implemented to determine whether expected results are actually realized.
Postaudit of Investment Projects: After an investment project has been approved and implemented, a postaudit should be conducted. A postaudit involves checking whether or not expected results are actually realized. This is a key part of the capital budgeting process. It helps to keep
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. In this situation, the return on common stockholders’ equity will be greater than the
Plant Wide Overhead Rate Definition: Plant wide overhead rate is a single predetermined overhead rate that is used throughout a plant.
Planning Definition: Selecting a course of action and specifying how the action will be implemented.
Planning and Control Cycle Definition: The flow of management activities through planning, directing and motivating, and controlling, and then back to planning again.
Profit Center Definition: A business segment whose manager has control over cost and revenue but has no control over the use of investment funds.
Plan-do-check-act (PDCA) Cycle Definition: A systematic approach to continuous improvement that applies the scientific method to problem solving. This is only definition of plan do check act cycle (PDCA) Click here to know more about plan-do-check-act (PDCA) cycle
Physical Inventory – Inventory Valuation: Even with a perpetual inventory system, periodic physical counts are necessary to discover and eliminate description between the actual count and the balances on materials ledger card. These descriptions may be due to: Errors on transferring invoice data to
Perpetual Inventory System Definition: Perpetual inventory system may be defined as a method of recording stores balances after every receipt and issue to facilitate regular checking and to obviate closing down for stock taking.” So perpetual inventory system implies continuous maintenance of stock records
Periodic Inventory System Definition: Periodic inventory system is that does not require a day-to-day record of inventory changes. Costs of materials used and costs of goods sold cannot be calculated until ending inventories, determined by physical count, are subtracted from the sum of opening
Performance Report Definition: Performance report is the detailed report comparing budgeted data to actual data.
Profit and Loss Account in Statement Form/Income Statement: Trading and profit and loss account/income statement may be prepared either in account form (T form) or in report form (statement form). Trading and profit and loss account in both the forms give the same information.
Production Budget Definition: Production budget is a detailed plan showing the number of units that must be produced during a period in order to meet both sales and inventory needs. This page only defines the term click here for detailed study about production budget.
Payback Period Definition: Payback period is the length of time that it takes for a project to recover its initial cost out of the cash receipts that it generates.
Payback Period Method for Capital Budgeting Decisions: Learning Objectives of the Article: Define and Explain payback period. Determine the payback period for an investment project. What are the advantages and disadvantages of Payback method? Definition and Explanation: The payback is another method to evaluate