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VARIANCE ANALYSIS Variance Analysis is the analysis of variances arising in a standard costing system into their constituent parts. It is the analysis and comparison of the factors which have caused the differences between predetermined standards and actual results, with a view to eliminating inefficiencies. ACCORDING TO I.C.M.A. “Variance analysis is the resolution into constituent…
STANDARD COSTING Standard costing is a cost accounting technique which compares the results of actual production with the basic standard, as anticipated, in terms of costs so as to determine the reasons for discrepancies between the anticipated and actual costs. ACCORDING TO W W BIGG “Standard costing discloses the cost deviations from standard and classifies…
ZERO BASE BUDGETING PROCESS Zero base budgeting process is process wherein each cost element for the period is clearly justified, in terms of cost benefits. The management analyses and prioritizes the activities, depending on the determinants like alignment with the organizational objectives, fund availability, etc. Hence, all the activities are reassessed every time the budget is prepared….
ZERO BASE BUDGETING Zero base budgeting is that form of budgeting wherein each cost element for the period is clearly justified, in terms of cost benefits. The management analyses and prioritizes the activities, depending on the determinants like alignment with the organizational objectives, fund availability, etc. Hence, all the activities are reassessed every time the budget is…
BUDGETARY CONTROL Budgetary control is the process by which budgets are prepared for the future period and are compared with the actual performance for finding out variances, if any. The comparison of budgeted figures with actual figures will help the management to find out variances and take corrective actions without any delay. ACCORDING TO INSTITUTE OF…
BUDGETARY CONTROL Budgetary control is the process by which budgets are prepared for the future period and are compared with the actual performance for finding out variances, if any. The comparison of budgeted figures with actual figures will help the management to find out variances and take corrective actions without any delay. ACCORDING TO INSTITUTE OF…
BUDGET IN ACCOUNTING Budget means a quantitative statement, prepared before a particular period to serve as an estimate of future receipts and disbursements. ACCORDING TO CHARTERED INSTITUTE OF MANAGEMENT ACCOUNTANTS, LONDON “Budget is a plan quantified in monetary terms prepared and approved prior to a defined period of time, usually showing planned income to be…
TOOLS AND TECHNIQUES OF MARGINAL COSTING Marginal costing is a technique of ascertaining cost used in any method of costing. According to this technique, variable costs are charged to cost units and the fixed cost attributable to the relevant period is written off in full against the contribution for that period. Contribution is the difference…
BREAK EVEN POINT Break-even point is a point where the total sales or revenue are equal to total costs. In breakeven point, there is no profit or loss in the volume of sales. In other words, it is a point at which no profit no loss situation prevails in the operating activity of a business…
PROFIT VOLUME RATIO The Profit Volume Ratio shows percentage of contribution to the sales value i.e. margin as percentage of sales out of it; the fixed cost is met and there is a profit. It is one of the tools used in marginal costing. The Profit Volume (P/V) Ratio is the measurement of the rate…
