RETURN TO GLOSSARY INDEX

Factory overhead

These are all the costs incurred during the manufacturing process, minus the costs of direct labor and materials.

Financial ledger

A book in which financial accounts are kept

First in first out

The earliest materials purchased are used first. The price paid for those earliest materials is used to value or price the issue.

Fixed cost

Cost that remains unaffected by changes in activity.

Fixed budget

A budget prepared for a single level of activity.

Fixed overhead cost variance

The difference between overhead absorbed and the overhead incurred.

Fixed overhead efficiency variance

The difference between the actual hours worked and the standard hours multiplied by the standard absorption rate.

Fixed overhead expenditure variance

The difference between the actual fixed overhead incurred and the budgeted fixed overhead

Fixed overhead volume variance

The difference between the actual output and the budgeted output multiplied by the standard absorption rate

Flexible budget

A budget prepared for a range of activity

Forecast

Looking to the future and predicting which is likely to happen

Functional budgets

Plans prepared for the various functions in an organization

Future cost

Cost that is expected to be incurred at some future date