Management Accounting
Factory Overhead Controllable Variance: Learning Objective of the article: Define and explain factory overhead controllable variance. How FOH controllable variance is calculated? What are the reasons / causes of unfavorable controllable variance? Contents: Definition Formula of factory overhead controllable variance Example Reasons / causes
Budget Variance Definition: A measure of the difference between the actual fixed overhead costs incurred during the period and budgeted fixed overhead costs as contained in the flexible budget.
Functions of Accounting (accounting functions): Learning Objectives: What are the important functions of accounting? Record Keeping Function: The primary function of accounting is to keep a systematic record of financial transaction – journalisation, posting and preparation of final statements. The purpose of this function
Control Definition: Control is the process of instituting procedures and then obtaining feedback to ensure that all parts of the organization are functioning effectively and moving toward overall company goals.
Full Costing Definition: Full costing is a costing method that includes all manufacturing costs – direct materials, direct labor, and both variable and fixed overhead – as part of the cost of a finished unit of product. This term is synonymous with absorption costing.
Budget Definition: Budget is a detailed plan for the future, usually expressed in formal quantitative terms.
Contribution Margin (CM) Ratio Definition: The contribution margin as a percentage of total sales is called contribution margin ratio. Contribution margin ratio = Contribution margin / Sales Click here to download Contribution Margin Ratio Notes (Printable)
Form of Ledger and Method of Posting: Form of Ledger: One account usually occupies one page in the ledger. But if the account is big one it may extend to two or more pages. The pages of the ledger are vertically divided into two
Budget Committee Definition: A group of key management persons who are responsible for overall policy matters relating to the budget program and for coordinating the preparation of the budget.
Cost Flow and Journal Entries–Process Costing System: Materials: Materials are drawn from the storeroom using a material requisition form. Materials can be added in any department, although it is not unusual for materials to be added only in the first department, with subsequent department
Flexible Budget Definition: A budget that is designed to cover a range of activity and that can be used to develop budgeted costs at any point within that range to compare to actual costs incurred.
Contribution Margin Definition: Contribution margin is the amount remaining from sales revenues after all variable expenses have been deducted. Contribution Margin = Sales Revenue – Variable Cost Click here to read full article about contribution margin
Flexible Budget Definition: A budget that is designed to cover a range of activity and that can be used to develop budgeted costs at any point within that range to compare to actual costs incurred.
Fixed Overhead Efficiency Variance: Learning Objective of the article: Define and explain fixed overhead efficiency variance. How is fixed overhead efficiency variance calculated? What are the reasons / causes of unfavorable fixed overhead efficiency variance? When companies adopt four variance approach they divide the
Contribution Approach Definition: Contribution approach is an income statement format that is geared to cost behavior in that costs are separated into variable and fixed categories rather than being separated according to the functions of production, sales, and administration.
Budget Committee: Learning Objective of the Article: What is a budget committee? What are the functions and responsibilities of a budget committee? Definition: Budget committee is a group of key management persons who are responsible for overall policy matters relating to the budget program
Learning Objectives: Define and explain contribution margin ratio. Calculate CM ratio. What is the importance and benefit of calculating CM ratio? Contribution margin percentage or average Definition of Contribution Margin Ratio Formula Calculation Importance Review Problems Contribution Margin Ratio Calculator Definition of Contribution Margin Ratio: The contribution margin as a percentage of total
Price Earnings Ratio (PE Ratio): Definition: Price earnings ratio (P/E ratio) is the ratio between market price per equity share and earning per share. The ratio is calculated to make an estimate of appreciation in the value of a share of a company and is widely used by