General Questions and Answers about Process Costing System: Questions: What is the primary objective in process costing? See answer Job order and process costing procedures are used by different types of industries. Discuss the procedure appropriate for each type. See answer For the following
Business Process Reengineering (BPR): Learning objective of the articles: Define and explain the concept of business process reengineering (BPR) What are the advantages and disadvantages of business process reengineering? Definition and Explanation of the Concept: Business Process reengineering (BPR) is a more radical approach
Process Reengineering Definition: An approach to improvement that involves completely redesigning business processes in order to eliminate unnecessary steps, reduce errors, and reduce costs. Click here to read full article about business process reengineering
Product Cost Versus Period Cost: Learning Objectives of this article: Define and explain the terms “product cost” and “period cost”. Give examples of each. What is the difference between product cost and period cost. In addition to the distinction between manufacturing and non-manufacturing costs,
Product Flow in Process Costing System: A product can flow through a factory in numerous ways. Three product flow formats associated with process costing – sequential, parallel, and selective – are illustrated here to indicate that basically the same costing procedures can be applied
Product Level Activities Definition: Activities that relate to specific products that must be carried out regardless of how many units are produced and sold or batches run.
Profitability Index Definition: Profitability index is the ratio of the present value of a project’s cash inflows to the investment required.
Promissory Note: Learning Objectives: Define and explain promissory note. Definition and Explanation: There is another method of payment similar to bill of exchange i.e., promissory note. In this method, in place of the seller drawing a bill of exchange on the purchaser, the purchaser
Learning Objectives: Define and explain the terms “profit planning” and “budgeting”. What is the difference between planning and control? What are the advantages and disadvantages of budgeting? Contents: Definition and Explanation of Profit Planning and Budgeting Difference Between Planning and Control Advantages and Disadvantages
Purchases Returns Book: Definition and Explanation: Purchases returns book is a book in which the goods returned to suppliers are recorded. It is also called returns outward book or purchases returns day book. Goods may be returned because they are of the wrong kind
Prevention Cost Definition: Prevention costs are those costs that are incurred to keep defects from occurring.
Inventory Purchases Budget for a Merchandising Firm: Learning Objectives: Define and explain an inventory budget. Prepare an inventory budget or merchandising purchase budget. Manufacturing firms prepare production budget but merchandising firms prepare merchandising purchase budget instead. Merchandising purchase budget shows the amount of goods
Materials Purchasing Forms: The principle forms required in purchasing are the purchase requisition form and the purchase order form. Purchase Requisition Form: The purchase requisition originates with (1) stores or where house clerk who observes that quantity on hand is at a set ordering
Zero Based Budgeting (ZBB) Definition: A method of budgeting in which managers are required to justify all costs as if the programs involved were being proposed for the first time.
Zero Based Budgeting (ZBB): Learning Objective of the article: Define and explain the term “zero based budgeting” and “incremental budgeting” in managerial accounting. Explain the importance and use of zero based budgeting in business. What are advantages and disadvantages of zero based budgeting? Contents:
Yield Definition: A term synonymous with internal rate of return and time-adjusted rate of return.
Volume Variance Definition: The variance that arises whenever the standard hours allowed for the output of a period are different from the denominator activity level that was used to compute the predetermined overhead rate.
Factory Overhead Volume Variance: Learning Objective of the article: Define and explain factory overhead volume variance. How is FOH volume variance calculated? Contents: Definition Formula Example Definition: Factory overhead volume variance represents the difference between the budget allowance and the standard expenses charged to