Month: July 2007

RETURN TO GLOSSARY INDEX Transfer price The price at which goods and services are transferred from one process or department to another process or department of the same organization

RETURN TO GLOSSARY INDEX Sales allowance variance The difference between the actual sales allowance and the standard allowance multiplied by the quantity sold Sales contribution variance The difference between the actual contribution and the budgeted contribution Sales margin variance The difference between actual profit and budgeted profit Sale price variance The difference between the actual … Read more

RETURN TO GLOSSARY INDEX Relevant cost Expected future cost that will differ under alternatives Relevant range Activity levels in which the cost and sales relationships can be expected to remain valid Retention money The amount of the contractee is allowed, by a clause in the contract, to withhold payment of a proportion of the contract … Read more

RETURN TO GLOSSARY INDEX Period costs Costs treated as costs of the period Prime cost the total cost of direct material, direct labor and direct expenses Prime cost percentage rate Estimated overhead divided by the estimated prime cost. The result is expressed as a percentage. Process costing A costing method applied where a product passes … Read more

RETURN TO GLOSSARY INDEX Opportunity cost The benefit foregone or lost when an alternative is rejected Over absorbed overhead The amount of overhead absorbed exceeds the amount of overhead incurred. Overhead The total cost of indirect material, indirect labor and indirect expenses Overtime premium Extra pay to workers for overtime work.

RETURN TO GLOSSARY INDEX Normal loss Unavoidable loss arising due to the nature of the material or the process Normal standard An average standard which can be attained over a period long enough to cover a trade cycle. Notional cost Cost that is not incurred but are introduced into the cost accounts to give a … Read more

RETURN TO GLOSSARY INDEX Machine hour rate Estimated overheads divided by the estimated number of machine hours Margin of safety The difference between the current sales level and the break-even point. Marginal cost The variable cost of one unit of product or service Marginal costing A costing technique to ascertain marginal costs and the effect … Read more

RETURN TO GLOSSARY INDEX Labor efficiency variance The difference between time spent in producing the actual output and the time that should have been spent multiplied by the standard rate Labor rate variance The difference between the rate per hour paid to labor and the standard rate set multiplied by the actual hours worked Last … Read more

RETURN TO GLOSSARY INDEX Job A cost unit which consists of individual production order Job costing A method of costing where a job is different and each job is of short duration Joint products Two or more products produced simultaneously from the same process.

RETURN TO GLOSSARY INDEX Ideal standard A standard based on the best possible operating condition Indirect costs Costs that cannot be conveniently traced to a product Idle time Unproductive time due to circumstances beyond the worker’s control. Integrated accounts A system where one set of accounts is maintained Interlocking accounts A system where the financial … Read more