See Also: Standard Costing System Standard Costing Example Here is a simple standard costing example. Let’s take a company that makes widgets. Based on historical data, a cost analyst determines that producing one widget typically requires 1 pound of raw material costing $2 dollars and 1 hour of labor costing $20 dollars. These are the
See Also: Credit Sales Daily Sales Outstanding (DSO) How to compensate sales staff Economic Order Quantity (EOQ) Economic Income Sales Order Definition A sales order definition is an internal document which lists buyer and sales quantity for a given purchase. It is also a valuable document for operations. A sales order form generally indicates that no
Product Life Cycle Definition A product life cycle, defined is the period from when a product goes through its initial specifications and research to the withdrawal of that product from the market. There are five product life cycle stages. Product Life Cycle Meaning The product cycle stages are as follows: Research and Development This is
See Also: Standard Costing System Activity Based Costing vs Traditional Costing Absorption vs Variable Costing Average Cost Cost Driver Process Costing Definition In accounting, process costing is a method of assigning production costs to units of output. In process costing systems, production costs are not traced to individual units of output. Costs are assigned first
Predetermined Overhead Rate Definition A company uses a predetermined overhead rate to allocate overhead costs to the costs of products. Indirect costs are estimated, a cost driver is selected, cost driver activity is estimated, and then indirect costs are applied to production output based on a formula using these data. Predetermined Overhead Rate Example For
See Also: Periodic Inventory System Just In Time Inventory System How to Manage Inventory Days Inventory Outstanding Analysis Inventory Turnover Analysis Supply Chain and Logistics Perpetual Inventory System A perpetual inventory system is a continuously updated inventory management system. This type of system uses technology such as bar coding, computerized production operations, and perpetual inventory
See Also: Economic Order Quantity (EOQ) Economic Production Run (EPR) Accounting Income vs. Economic Income Feasibility Study Economic Value Added Mixed Economy Definition The mixed economy definition is an economy where both the private market and the government control the factors of production. It is the most common form of economy that exists in the
See Also: Marginal Cost Definition Variable vs Fixed Cost Sunk Costs Marginal Costs Average Cost Breakeven Analysis Marginal Costs Marginal cost refers to the cost of producing another unit of output as production volume changes. As production volume changes the price of producing each additional unit of output changes. Marginal cost measures that change. It is
See Also: Indirect Labor Audit Committee Managed Sales And Use Tax Audit Programs Mining the Balance Sheet for Working Capital Inventory to Working Capital Indirect Materials Definition In accounting, the indirect materials definition is a category of indirect cost. Indirect materials are materials used in a production process, but they are not directly traceable to
See Also: Company Life Cycle Market Positioning Marking to Market Mining the Balance Sheet for Working Capital Inventory to Working Capital Make-or-Buy Business Decision Make-or-buy decisions arise in business when a company must decide whether to produce goods internally or to purchase them externally. This typically is an issue when a company has the ability
See Also: Indirect Materials Accounts Payable Audit Committee Managed Sales And Use Tax Audit Programs Carried Interests Indirect Labor Definition In accounting, indirect labor is a category of indirect cost. It refers to labor costs incurred during a service or production process, but are not directly traceable to a cost object. Consider them overhead costs and treat
See Also: Accounting Principles Accounting Concepts Generally Accepted Accounting Principles (GAAP) How to manage inventory Inventory Cost Lower of Cost or Market (LCM) Definition Lower of cost or market accounting is generally based off of the accounting concept conservatism. It generally states that certain accounts should be stated at their historical costs or market costs
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