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Variance analysis, in budgeting or management accounting in general, is a tool of budgetary control and performance evaluation, assessing any variances between the budgeted, planned, or standard amount, and the actual amount realized. Variance analysis can be carried out for both costs and revenues.
There are two reasons actual sales can vary from planned sales: either the volume sold varied from the expected quantity, known as sales volume variance, or the price point at which units were sold differed from the expected price points, known as sales price variance. Both scenarios could also simultaneously contribute to the variance.
An important part of standard cost accounting is a variance analysis, which breaks down the variation between actual cost and standard costs into various components (volume variation, material cost variation, labor cost variation, etc.) so managers can understand why costs were different from what was planned and take appropriate action to ...
Internal rate of return (IRR) is a method of calculating an investment's rate of return.The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk.
Current Expected Credit Losses (CECL) is a credit loss accounting standard (model) that was issued by the Financial Accounting Standards Board on June 16, 2016. [1] CECL replaced the previous Allowance for Loan and Lease Losses (ALLL) accounting standard. The CECL standard focuses on estimation of expected losses over the life of the loans ...
A project value is computed for each scenario, and the expected commercial value is obtained by multiplying each situation's value by the scenario odds and adding the results. Depending on the procedures used to estimate the value of the project under each scenario, ECV can be a useful way to address project uncertainties.
The nominal value of a commodity bundle tends to change over time. In contrast, by definition, the real value of the commodity bundle in aggregate remains the same over time. The real values of individual goods or commodities may rise or fall against each other, in relative terms, but a representative commodity bundle as a whole retains its ...
The traditional method of valuing future income streams as a present capital sum is to multiply the average expected annual cash-flow by a multiple, known as "years' purchase". For example, in selling to a third party a property leased to a tenant under a 99-year lease at a rent of $10,000 per annum, a deal might be struck at "20 years ...