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When cost accounting was developed in the 1890s, labor was the largest fraction of product cost and could be considered a variable cost. Workers often did not know how many hours they would work in a week when they reported on Monday morning because time-keeping systems (based in time book) were rudimentary. Cost accountants, therefore ...
Cost classifications based on functions, activities, products, processes and on the information needs of the organization in its planning and control. Cost classifications based on the types of transactions. Combines objective and subjective assessment of costs contributing to a standard result. Aims to present a 'true and fair' view of ...
Direct labour and materials are relatively easy to trace directly to products, but it is more difficult to directly allocate indirect costs to products. Where products use common resources differently, some sort of weighting is needed in the cost allocation process. The cost driver is a factor that creates or drives the cost of the activity ...
RPR = (amount of known resource) / (amount used per year) This ratio is used by companies and government agencies in forecasting the future availability of a resource to determine project life, future income, employment, etc., and to determine whether more exploration must be undertaken to ensure continued supply of the resource.
When a company sells more than one type of product, the product mix (the ratio of each product to total sales) will remain constant. The components of CVP analysis are: Level or volume of activity. Unit selling prices; Variable cost per unit; Total fixed costs; Manpower Cost Direct and indirect
You’ll find the current ratio with other liquidity ratios. General Electric’s (GE) current assets in December 2021 were $65.5 billion; its current liabilities were $51.95 billion, making its ...
A ratio's values may be distorted as account balances change from the beginning to the end of an accounting period. Use average values for such accounts whenever possible. Financial ratios are no more objective than the accounting methods employed. Changes in accounting policies or choices can yield drastically different ratio values. [6]
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