Month: September 2020

A budget– is a formal expression of income and expenditure for a given future period. Budgeting– refers to the mechanism of preparing budgets. Budgetary control – refers to the process of comparing actual results with budgeted results and analyzing the Read More …

  Direct material cost variance: 1) Material cost variance = (actual price x actual quantity) – (standard price x standard quantity) 2) Material price variance = (actual price – standard price) actual quantity 3) Material usage variance = (actual quantity Read More …

Introduction Standard costing – is a technique which establishes predetermined estimates of the cost of products and then compares these predetermined costs with actual costs as they are incurred. The predetermined costs are known as standard costs and the difference Read More …

All manufacturing costs (variable and fixed) are considered as cost of production and are used in determining the cost of goods manufactured and the value of inventories. Fixed manufacturing overheads are absorbed into the cost of finished goods.   Arguments Read More …

This is a costing technique in which only variable manufacturing costs are considered and used in valuing inventories and also in determining the cost of goods sold i.e. only variable production cost are considered as products cost and are allocated Read More …

This is a systematic way of examining the relationship between changes in activity level and changes in the total sales revenues, expenses and net profit. The objective of CVP analysis is to establish what would happen to the financial results Read More …

Introduction This is a method of costing employed to ascertain the cost of providing a service e.g. road transport undertakings, electricity supply, canteen services, airways services etc. In general, the unit of cost in service costing may be predetermined as Read More …

Introduction Process costing is a form of costing where production follows a series of sequence or processes. In process costing the output of any given process becomes the input of the next process. It’s used in such industries as oil Read More …

Introduction Contract costing is a costing technique which is applied in accumulating the cost of large scale jobs. It is also called terminal costing. Characteristics of contract costing There is a high proportion of direct cost since almost all the Read More …

Introduction This is a form of order costing which applies in situations where work is executed strictly according to customers’ specifications. The production process depends upon the number of orders received from customers. As such production is not standardized and Read More …