Accounting Articles

Variable overhead efficiency variance

The standard overhead rate is calculated by dividing budgeted overhead at a given level of production (known as normal capacity) by the level of activity required for that particular level of production. For example, the number of labor hours taken to. Read more

6 2 Variable Costing Managerial Accounting

Under the Tax Reform Act of 1986, income statements must use absorption costing to comply with GAAP. Despite the good benefits that companies can derive from using the absorption costing method, it has some disadvantages. The major dark sides of this. Read more

How to calculate cost per unit

Companies that manufacture goods will have a more clearly defined calculation of unit costs while unit costs for service companies can be somewhat vague. A unit cost is a total expenditure incurred by a company to produce, store, and sell one. Read more

Activity Method of Depreciation Example Limitation

Let us understand the units-of-activity method of depreciation by taking an example. This method can be contrasted with time-based measures of depreciation such as straight-line or accelerated methods. Momhil Inc. bought a professional coffee machine costing $100,000. Over its useful life it. Read more

20 Synonyms & Antonyms of UNDERSTANDABILITY

The preceding concepts do not mean that complex information should be excluded from the financial statements. In these situations, apply the understandability concept as much as possible, but still present the required information. Understandability is the concept that financial information should. Read more

Buyer Entries under Perpetual Method Financial Accounting

Therefore, an actual physical inventory count should be performed at specified intervals, usually once a year. To understand perpetual inventory systems better, it is worth considering an example. The journal entries used when bookkeeping in the perpetual inventory system are different. Read more

What are different types of standards under standard costing?

The use of ideal standards is not common among companies because they are based on highly strict assumptions that do not allow even the normal inefficiencies. ITU (International Telecommunications Union) The International Telecommunication Union (ITU) is an international organizationwhich provides global. Read more

9 3 Treasury stock

When accounting for the purchase of treasury stock, the transaction will consist of debiting the contra equity account and crediting the cash account. For example, company ABC repurchases 10,000 of its own stock at $5 per share with a total transaction. Read more