Cost Accounting
Cost accounting is a branch of accounting which deals with cost incurred at the time of production as well as the cost of depreciation of fixed assets. Cost accounting helps in decision making of the company. Cost accounting is also helpful in budgeting management of company.
Variable Overhead Efficiency Variance Definition: The difference between the actual activity (direct labor-hours, machine-hours, or some other base) of a period and the standard activity allowed, multiplied by the variable part of the predetermined overhead rate.
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
Variable Costing Definition: A costing method that includes only variable manufacturing costs–direct materials, direct labor, and variable manufacturing overhead–in unit product cost. Variable costing is also called marginal costing and direct costing.
Plant Wide Overhead Rate Definition: Plant wide overhead rate is a single predetermined overhead rate that is used throughout a plant.
Variable Cost Definition: Variable cost is a cost that varies, in total, in direct proportion to changes in the level of activity. A variable cost is constant per unit.
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.
Value Chain Definition: The major business functions that add value to a company’s products and services. These functions consist of research and development, product design, manufacturing, marketing, distribution, and customer service.
Similarities Between Job Order and Process Costing System: Learning Objectives of this article: What are the differences and similarities in process costing and job order costing procedures. Similarities between job order costing and process costing systems can be summarized as follows. Both systems have
Universality of Management Definition: Universality of management means the reality that management is needed in all types and sizes of organizations, at all organizational levels, in all organizational areas, and in organizations in all countries around the globe.
Unit-Level Activities Definition: Activities that arise as a result of the total volume of goods and services that are produced, and that are performed each time a unit is produced.
Service Department Costing: After studying this chapter you should be able to: Difference between service department and operating department: Most of the large organizations have both operating departments and service departments. The central purpose of the organization are carried out in the operating department.
Under-Applied Overhead Definition: A debit balance in the Manufacturing Overhead account that arises when the amount of overhead cost actually incurred is greater than the amount of overhead cost applied to Work in Process during a period.
Selecting Allocation Base: Costs are ordinarily assigned to products and services by using a two stage process. In first stage, service department and other costs are allocated to operating departments. In second stage, the costs that have been assigned to operating departments are allocated
Overhead Application Definition: The process of charging manufacturing overhead cost to job cost sheets and to the Work in Process account.
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
Over-applied Overhead Definition: Over-applied overhead is a credit balance in the Manufacturing Overhead account that arises when the amount of overhead cost applied to Work in Process is greater than the amount of overhead cost actually incurred during a period.