Accounting Definitions
Accounting definitions are defined by different authors in different ways. Accounting definitions are easy to understand and in easy language. Accounting definitions provides proper guideline & process in the preparation of different accounts of any thing.
Marginal Costing Definition: Marginal Costing is a costing method that includes only variable manufacturing costs–direct materials, direct labor, and variable manufacturing overhead–in unit product cost. Marginal costing is also called variable costing and direct costing. Marginal cost of the product = Direct materials cost
Net Operating Income Definition: Income before interest and income taxes have been deducted.
Margin Definition: Margin can be defined as net operating income divided by sales. Margin = Net operating income / Sales Sales include all cash as well as credit sales. Example: A company’s net operating income is $10,000. Total sales for the year were $30,000.
Manufacturing Overhead Definition: Manufacturing overhead costs are all costs associated with manufacturing except direct materials and direct labor.
Negotiated Transfer Price Definition: Negotiated transfer price is a transfer price agreed on between buying and selling division.
Manufacturing Overhead Budget Definition: Manufacturing overhead budget is a detailed plan showing the production costs, other than direct materials and direct labor, that will be incurred over a specified time period. Learn More About Manufacturing Overhead Budget: Click here to read more about manufacturing
Positive and Negative Operating Leverage Definition: Positive Operating Leverage: When fixed cost has a greater portion in the total cost structure of the firm / company, a small percentage increase in sales increases a greater percentage in net operating income. This concept is known
Manufacturing Cycle Efficiency (MCE) Definition: Manufacturing cycle efficiency (MCE) is the Process (value-added) time as a percentage of throughput time. OR Quotient of the time required for value-added production divided by Total Cycle Time. It is a measure of how well a company’s manufacturing
Managerial or Management or Cost Accounting Terms and Definitions: Following are the most important managerial or management or cost accounting terms. These terms are alphabetically arranged. This arrangement makes easy to find your desired managerial accounting terms and their accounting definitions. We encourage you
Learning Organization Definition: Learning organization is an organization that has developed the capacity to continuously learn, adapt, and change.
Differential Revenue Definition: Differential revenue is the difference in revenue between any two alternatives. Example: Revenue from first alternative = $5000; Revenue from second alternative = $4000; Differential revenue = $5000 – $4000 = $1000
Leading Definition: Management function that involves motivating subordinates, influencing individuals or teams as they work, selecting the most effective communication channels, or dealing in any way with employ behavior issues.
Differential Cost Definition: Any cost that differs between alternatives in a decision-making situation. In managerial accounting, this term is synonymous with avoidable cost and relevant cost. Also see Incremental cost. Example: Cost of first alternative = 5000; Cost of second alternative = 4000; Differential
Negative Financial Leverage Definition: Negative financial leverage is a situation in which the fixed return to a company’s creditors and preferred stockholders is greater than the return on total assets. In this situation, the return on common stockholders’ equity will be less than the
Manager Definition: Someone who works with and through other people by coordinating their work activities in order to accomplish organizational goals. OR One who handles, controls, or directs, especially: One who directs a business or other enterprise. One who controls resources and expenditures, as
Labor Rate Variance Definition: A measure of the difference between the actual hourly labor rate and the standard rate, multiplied by the number of hours worked during the period. Relevant Terms: Labor rate variance Labor Efficiency Variance Materials price variance Materials quantity variance
Management Definition: Coordinating work activities so that they are completed efficiently and effectively with and through other people. Relevant Terms: Manager First Line Managers Middle Managers Top Level Managers
Management By Exception Definition: Management by exception is a system of management in which standards are set for various operating activities, with actual results then compared to these standards. Any differences that are deemed significant are brought to the attention of management as “exceptions.”