Essential features includes: a clear and concise statement about the goals, targets or objectives to be achieved a facility and an ability to measure the actual state of the process being controlled communication channels facilitating the feedback of the actual stage of the process to a recorder and back to the control unit an ability … Read more
When studying managerial accounting, understanding break even point and formula are quite critical for operating managers as breakeven point are critical for the survival of a business . Below is a quick reference table summarizing all the major breakeven analysis formulas BREAKEVEN ANALYSIS FORMULAS Contribution sales minus marginal(variable) cost Contribution fixed cost plus profit Profit … Read more
OVERHEAD COSTING FORMULAS Predetermined absorption rate estimated or budgeted overhead for the period estimated or budgeted units of base for the period Direct material cost % rate budgeted overhead x 100 budgeted direct material costs Direct labor cost % rate budgeted overhead x 100 budgeted direct labor cost Prime cost % rate budgeted overhead X … Read more
LABOR COSTING FORMULAS Gross pay Hours worked x rate per hour or number of units produced x rate per unit Halsey scheme 50% of time saved x rate per hour Halsey Weir scheme 1/3 of time saved x rate per hour Rowan scheme (time taken/time allowed x time saved) x rate per hour Time saved … Read more
FORMULAS USED IN STANDARD COSTING Material cost variance Standard material cost less actual material cost Material price variance (standard price less actual price) x actual quantity purchased or used Material usage variance (standard quantity for actual output less actual quantity) x standard price Material mix variance (actual mix less standard mix ) x standard price … Read more
Purpose of Rowan Premium Bonus Scheme: An incentive scheme to reward direct labor for saving time during the production process This method rewards the production worker with a proportion of the time saved Formula: Proportion of time saved = Time taken/Time allowed x Time saved Illustration: Mr. A is being paid $9 per hour. The … Read more
The Importance of Recording Labor time accurately:- It is important to record labor time accurately for the following reasons: To compute wages To analyze the time spent for costing purposes and For planning and control purposes The Methods to record labor times Time sheets record the worker’s time spent on each job. The time sheets … Read more
The Cash Receipts Journal This Journal records all cash RECEIVED. The sources of information required to write up this Journal are as follow: duplicate receipts for amounts received from debtors daily cash sale sheets bank statement for items such as deposits made direct into the bank by customers and interest on investments collected by bank … Read more
The Cash Payment Journal This Journal records all CASH PAYMENTS. The sources of information required to write up this Journal are as follow: cheque stubs for all payments made by cheque bank statement for items such as bank charges, dishonored cheques and interest on bank overdraft A typical Cash Payment Journal format is as follows: … Read more
The Purchase Journal This Journal records all purchases on CREDIT. The book is written up from the actual invoices received from trade suppliers. Purchase Journal as follows: Date Invoice No Particulars Folio No Details($) Monthly Total($) 2007 Jan 1 72306 Supplier A PL 8 190.00 20 42315 Supplier B PL 11 150.00 31 42327 Supplier … Read more