Segment Reporting and Profitability Analysis-Segmented Income Statements: Learning Objectives: What is segment reporting managerial accounting ? How are segmented income statements prepared? A different kind of income statement is required for evaluating the performance of a profit or investment center. This income statement should
Inventory Turnover Ratio or Stock Turnover Ratio (ITR) : Every firm has to maintain a certain level of inventory or stock of finished goods so as to be able to meet the requirements of the business. But the level of inventory should neither be
Stock Control: Definition and Explanation: The materials purchased by a concern may be classified as stock items which are taken into store and held until required, or as direct deliveries to the point of consumption. The control of those materials which are stock items
Step Variable Cost Definition: A cost (such as the cost of a maintenance worker) that is obtainable only in large chunks and that increases and decreases only in response to fairly wide changes in the activity level.
Step Method Definition: The allocation of a service department’s costs to other service departments, as well as to operating departments, in a sequential manner. The sequence starts with the service department that provides the greatest amount of service to other departments.
Step Method of Cost Allocation: Definition: Step method is the method of allocating service department’s costs to other service departments, as well as to operating departments, in a sequential manner. The sequence typically starts with the service department that provides the greatest amount of
Statistical Process Control Definition: A charting technique used to monitor the quality of work being done in a workstation for the purpose of immediately correcting any problem.
Static Budget Definition: A budget designed for only one level of activity.
Understanding Cash Flow Statement-Format and Sections: Contents: Introduction to cash flow statement Sections of cash flow statement Format of the cash flow statement Introduction to cash flow statement: Three major financial statements are ordinarily required for external reports―an income statement, a balance sheet, and
Statement of Affairs method: Learning Objectives: Define and explain statement of affairs. What is the purpose of preparing a statement of affairs? Prepare the format of statement of affairs. Definition and Explanation: Correct final accounts of a business can be prepared in the
Standard Quantity Per Unit Definition: The amount of materials that should be required to complete a single unit of product, including allowances for normal waste, spoilage, rejects, and similar inefficiencies.
Standard Quantity Allowed Definition: The amount of materials that should have been used to complete the period’s output as computed by multiplying the actual number of units produced by the standard quantity per unit.
Standard Hours Per Unit Definition: The amount of labor time that should be required to complete a single unit of product, including allowances for breaks, machine downtime, cleanup, rejects, and other normal inefficiencies.
Standard Hours Allowed Definition: The time that should have been taken to complete the period’s output as computed by multiplying the actual number of units produced by the standard hours per unit.
Standard Costing and Variance Analysis Case Study: Case A: Effect of assumed standard levels Case B: Factory overhead variance analysis Case A: Effect of Assumed Standard Levels: Harden Company has experienced increased production costs. The primary area of concern identified by management is direct
Standard Costing and Variance Analysis: After studying this chapter you should be able to: Explain how direct materials standard and direct labor standards are set. Compute the direct materials price and quantity variances and explain their significance. Compute the direct labor rate and efficiency
Standard Costing and Variance Analysis Problems & Solution: Problem 1: Materials Variance Analysis: The Schlosser Lawn Furniture Company uses 12 meters of aluminum pipe at $0.80 per meter as standard for the production of its Type A lawn chair. During one month’s operations, 100,000
Standard Costing System Discussion Questions and Answers: Questions: (a) Define standard costs. (b) Name some advantages of standard cost system. See answer A team of management consultants and company executives concluded that a standard cost installation was desirable vehicle for accomplishing the objectives of