Accounting Tools

MARCH 7, 2024

What is Estimated Cost? Estimated cost is the projection of the amount of costs that will be incurred to build a product or construct something. This amount is derived as part of the capital budgeting process for an internal project, or as part of a sales bid when attempting to sell to a customer.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

FEBRUARY 15, 2024

Total cost is less applicable to short-term decision making, where it is more likely that only variable costs will be considered. The alternative definitions for total cost are noted below. In general, it is the most comprehensive view of invested funds.

Cost Accounting 72

Cost Accounting Financial Reporting Budgeting Tax 72

Accounting Tools

APRIL 6, 2024

Budgeting Function The department assists the rest of the company with the formulation of a company-wide budget , which is used to plan for expenditures in the coming year, including the purchase of fixed assets. The previous year’s budget may be used as a baseline to formulate the budget for the next year.

Accounting 75

Accounting Accounting Financial Statements Budgeting 75

Accounting Tools

NOVEMBER 1, 2023

Related Courses Accounting for Inventory Cost Accounting Fundamentals How to Audit Inventory Direct material is the physical items built into a product. The direct materials concept is used in cost accounting , where this cost is separately classified in several types of financial analysis.

Financial Analysis 75

Financial Analysis Cost Accounting Budgeting Auditing 75

Accounting Tools

APRIL 24, 2024

The same approach works in reverse, where the variable component of the cost will be eliminated when the activity level declines below a certain amount.

Cost Accounting 75

Cost Accounting Budgeting Billing Accounting 75

Accounting Tools

APRIL 14, 2024

How to Calculate the Sales Volume Variance The sales volume variance is the difference between the actual and expected number of units sold, multiplied by the budgeted price per unit. What Causes a Sales Volume Variance? Trade restrictions. A foreign country may have altered its barriers to competition.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

APRIL 17, 2024

If the actual price is lower than the budgeted price, the result may actually be favorable to the company, as long as the price decline spurs demand to such an extent that the company generates an incremental profit as a result of the price decline.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

JUNE 19, 2023

Related Courses Cost Accounting Fundamentals Effective Sales Management The Interpretation of Financial Statements What is Sales Mix? How to Calculate Sales Mix A cost accounting variance called sales mix variance is used to measure the difference in unit volumes in the actual sales mix from the planned sales mix.

Budgeting 75

Budgeting Financial Statements Cost Accounting Accounting 75

Accounting Tools

APRIL 28, 2024

Related AccountingTools Courses Activity-Based Costing Cost Accounting Fundamentals Standard Costs and Variance Analysis Types of Standard Cost Variances There are many types of standard cost variances, including the following: Fixed overhead spending variance. Variable overhead spending variance.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

APRIL 11, 2023

Related Courses Budgeting Cost Accounting Fundamentals What is Cost Variance Analysis? Cost variance analysis is a control system that is designed to detect and correct variances from expected levels. A more refined approach is to split this difference into two elements, which are: Price variance.

Budgeting 75

Budgeting Cost Accounting Accounting Accounting 75

Accounting Tools

NOVEMBER 3, 2023

Related Courses Cost Accounting Fundamentals What is the Production Volume Variance? It is the difference between the actual number of units produced in a period and the budgeted number of units that should have been produced, multiplied by the budgeted overhead rate.

Budgeting 75

Budgeting Cost Accounting Accounting Accounting 75

Accounting Tools

APRIL 17, 2024

Understanding Life Cycle Costing The life cycle costing concept applies to multiple areas, including capital budgeting, procurement, engineering, and customer service. This analysis can lead to more robust products, once management realizes that sturdier products incur lower warranty and field servicing costs.

Customer Service 75

Customer Service Budgeting Financial Analysis Cost Accounting 75

Accounting Tools

JULY 12, 2023

Related Courses Cost Accounting Fundamentals What is an Unfavorable Variance? An unfavorable variance is encountered when an organization is comparing its actual results to a budget or standard. Unfavorable Revenue Variance When the amount of actual revenue is less than the standard or budgeted amount.

Budgeting 75

Budgeting Budgeting Manager Cost Accounting Accounting 75

Accounting Tools

SEPTEMBER 24, 2023

Related Courses Budgeting Cost Accounting Fundamentals What is a Cost Function? A cost function is a formula used to predict the cost that will be experienced at a certain activity level.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

DECEMBER 26, 2023

With the low cost structure that goes with a low overhead rate, a business can consistently underprice its competitors, which usually results in increased market share. Terms Similar to Overhead Rate Overhead rate is also known as the predetermined overhead rate when budgeted information is used to calculate it.

Budgeting 75

Budgeting Cost Accounting Financial Reporting Accounting 75

Accounting Tools

OCTOBER 23, 2023

Related Courses Cost Accounting Fundamentals What is the Fixed Overhead Spending Variance? The fixed overhead spending variance is the difference between the actual fixed overhead expense incurred and the budgeted fixed overhead expense.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

MAY 2, 2024

The costs of these departments may be charged to the using departments under the terms of an annual service agreement, so that all managers concerned can budget for the charges that will be billed. Related AccountingTools Courses Cost Accounting Fundamentals Cost Management Guidebook Related Article Service Department

Billing 40

Billing Budgeting Cost Accounting Accounting 40

Accounting Tools

OCTOBER 21, 2023

Related Courses Cost Accounting Fundamentals What is a Cost Variance? A cost variance is the difference between the cost actually incurred and the budgeted or planned amount of cost that should have been incurred. This information is needed to monitor the costs incurred to produce goods.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

SEPTEMBER 28, 2023

Related Courses Accounting for Inventory Budgeting Cost Accounting Fundamentals What is an Actual Cost? Actual cost is the actual expenditure made to acquire an asset , which includes the supplier -invoiced expense, plus the costs to deliver, set up, and test the asset.

Financial Statements 40

Financial Statements Budgeting Cost Accounting Invoicing 40

Accounting Tools

FEBRUARY 11, 2024

Example of Normal Costing As an example of normal costing, Everly Brothers is a bidet manufacturer that produces a low-slung and high version of its signature product. By using normal costing, Everly can budget for the production cost of these bidets next year, using the per-unit factory overhead costs incurred in the current year.

Financial Reporting 74

Financial Reporting Cost Accounting Budgeting Accounting 74

Accounting Tools

OCTOBER 11, 2023

Related Courses Accounting for Inventory Cost Accounting Fundamentals What is Actual Overhead? Actual overhead is the amount of indirect factory costs that are actually incurred by a business. Based on these estimates, the budgeting team establishes a standard overhead rate of $10 per unit produced.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

MARCH 11, 2024

Examples of an Exception Report As an example of an exception report, a report could point out those instances in which expenses were higher than the budget. Related AccountingTools Courses Cost Accounting Fundamentals Cost Management Guidebook Operations Management Related Articles Accounting for Variances Cost Control

Customer Service 40

Customer Service Budgeting Cost Accounting Accounting 40

Accounting Tools

FEBRUARY 23, 2024

A sales variance is the monetary difference between actual and budgeted sales. For example, management may decide to keep the budgeted price point throughout the measurement period, despite the price being clearly higher than that of a competing product. What is a Sales Variance? This is known as the sales volume variance.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

MAY 16, 2023

Related Courses Cost Accounting Fundamentals What is a Non-Controllable Cost? A non-controllable cost is an expense that is not within the sphere of control of a manager. The cost may be controllable at a higher level of the organization, but it is not controllable from the perspective of the person in question.

Cost Accounting 40

Cost Accounting Budgeting Accounting Accounting 40

Accounting Tools

SEPTEMBER 25, 2023

Related Courses Accounting for Inventory Cost Accounting Fundamentals What is Extended Normal Costing? Extended normal costing derives production costs by multiplying budgeted or standard costs by the number of actual units produced.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

OCTOBER 1, 2023

Related Courses Cost Accounting Fundamentals What is an Incurred Cost? An incurred cost is a cost arising from the consumption of an asset or service, or from a loss that has been sustained.

Accruals 40

Accruals Financial Statements Budgeting Cost Accounting 40

Accounting Tools

MAY 10, 2023

Related Courses Cost Accounting Fundamentals Cost Management Guidebook What is a Postponable Cost? A postponable cost is an expenditure that can be delayed to a future date without having a notable impact on short-term results. These costs are usually reduced first when a business suffers a decline in revenue.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

JULY 26, 2023

Related Courses Cost Accounting Fundamentals What is a Variance Report? The typical format is to first present the actual results, followed by the expected results (in the form of a budgeted or standard number), after which the variance amount and variance percentage are stated.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

OCTOBER 8, 2023

Related Courses Cost Accounting Fundamentals Cost Management Guidebook Types of Overhead Variances Overhead variances arise when the actual overhead costs incurred differ from the expected amounts. The variance is used to focus attention on those overhead costs that vary from expectations.

Budgeting 40

Budgeting Computation Cost Accounting Accounting 40

Accounting Tools

JANUARY 24, 2024

Direct material mix variance is the difference between the budgeted and actual mixes of direct material costs used in a production process. This variance isolates the aggregate unit cost of each item, excluding all other variables. What is the Direct Material Mix Variance?

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

NOVEMBER 20, 2023

For example, if you budget for sales to be $10,000 and actual sales are $8,000, variance analysis yields a difference of $2,000. To continue with the example, a complete analysis of the sales variance would be: "Sales during the month were $2,000 lower than the budget of $10,000. Variable overhead efficiency variance.

Budgeting 75

Budgeting Financial Analysis Billing Cost Accounting 75

Accounting Tools

APRIL 4, 2023

Related Courses Accounting for Managers Cost Accounting Fundamentals What is a Favorable Variance? For an expense, this is the excess of a standard or budgeted amount over the actual amount incurred. Consequently, a large favorable variance may have been manufactured by setting an excessively low budget or standard.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

AUGUST 7, 2023

Related Courses Cost Accounting Fundamentals Effective Sales Management What is the Sales Mix Variance? The sales mix variance measures the difference in unit volumes in the actual sales mix from the planned sales mix. Contribution margin is revenue minus all variable expenses. Do the same for each of the products sold.

Budgeting 40

Budgeting Cost Accounting Accounting Accounting 40

Accounting Tools

MARCH 5, 2024

When expenses are largely comprised of fixed charges, it is much easier for a business to predict its future expenses via a budget , since these costs rarely change. Thus, an oil refinery can be expected to have a much higher proportion of fixed charges than a consulting practice.

Cost Accounting 40

Cost Accounting Budgeting Accounting Accounting 40

Accounting Tools

APRIL 4, 2023

Related Courses Cost Accounting Fundamentals Managerial accounting involves collecting, analyzing, and reporting information about the operations and finances of a business. The functions of managerial accounting include the following: Margin analysis. Capital budgeting analysis.

Accounting 75

Accounting Accounting Financial Statements Financial Reporting 75

Accounting Tools

SEPTEMBER 24, 2023

The accounting department is part of the corporate overhead group of an organization. It is responsible for billings, payroll , cost accounting , the production of financial statements , paying suppliers , and similar activities.

Accounting 40

Accounting Accounting Financial Analysis Financial Statements 40

Accounting Tools

JULY 27, 2023

Related Courses Credit and Collection Guidebook Bookkeeping Guidebook Budgeting CFO Guidebook Cost Accounting Fundamentals New Controller Guidebook Payables Management Payroll Management Project Accounting Someone wanting to enter the accounting field can choose to train for a number of possible positions.

General Ledger 40

General Ledger Accounting Accounting Payroll 40