by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
What are Standard Costs?Standard costs are costs that management expects to incur to provide a good or service. They serve as the “standard” by which performance will be evaluated. Manufacturing companies have a standard quantity of direct materials to be used to...
by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
What are Joint Products?Two or more products made from a single input are called joint products. The costs of the single input and related manufacturing process costs must be allocated to each of the joint products. What are Joint Costs? The cost of this single input...
by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
Using Differential Analysis to Make DecisionsDifferential revenues and costs (also called relevant revenues and costs or incremental revenues and costs) represent the difference in revenues and costs among alternative courses of action. Analyzing this difference is...
by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
What is the Theory of Constraints?The theory of constraints, a variation of differential analysis, is an approach that enables companies to optimize the use of limited resources. Five steps are involved. First, find the constrained resource (or bottleneck). Second,...
by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
What is the Margin of Safety? Managers often like to know how close projected sales are to the break-even point.The excess of projected sales over the break-even point is called the margin of safety. The margin of safety represents the amount by which sales can fall...
by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
What is Cost-Volume-Profit Analysis for Single-Product Company?The profit equation shows that profit equals total revenues minus total variable costs and total fixed costs. Profit = Revenue – Total Variable Costs – Total Fixed CostsThis profit equation is...
by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
What is a Contribution Margin Income Statement?The traditional income statement format used for external financial reporting simply breaks costs down by functional area: cost of goods sold and selling and administrative costs. It does not show fixed and variable...
by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
What is a Production Cost Report?A production cost report identifies the total cost (direct materials, labor, and overhead), of producing a product.A production cost report helps managers answer several important questions: How much does it cost to produce each unit...
by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
What is the Weighted Average Product Costs?The weighted average method is used to assign all costs in a process-costing system to the products produced. In a process costing system, cost per equivalent unit is the term used to describe the average unit cost for each...
by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting
What is the Department Allocation of Costs?The department allocation approach is similar to the plant-wide approach except that cost pools are formed for each department rather than for the entire plant, and a separate predetermined overhead rate is established for...
