Standard Costing and Budgetary Control

standard costing and budgetary control

Both standard costing and budgetary control achieve the same objective of maximum efficiency and cost reduction by establishing a predetermined standard, comparing actual performance with the predetermined standard and taking corrective measures, where necessary. Thus, although both are useful tools for the management in controlling cost, they differ in the …

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Marginal Costing and Absorption Costing difference

The marginal costing is a technique of an accounting which may be defined as, “the ascertainment of cost by differentiating between fixed cost and variable cost of marginal cost and of the effect on profits of changes in the volume of the type of output”. Marginal costing distinguishes between fixed …

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Cost Object – Definition

cost object definition

A cost object is anything for which a separate measurement of costs is desired. Examples include a product, a service, a project, a customer, a brand category, an activity and a department. Manufacturing departments are either considered as cost pools of cost objects, depending upon whether management’s focus is on …

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Myth about depreciation

It is most important to realise that the depreciation concept is not designed to provide a means or method to replace ageing assets. Depreciation is not intended to be a ‘savings-scheme’ by which the company can fund purchases of new assets. Many non-accountants believe that depreciation creates a fund which …

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The concept of accruals and prepayments

Accruals and prepayments lie at the heart of the double-entry bookkeeping system and modern financial accounting. The accruals concept is often used to refer to both accruals (outstanding or unpaid expenses) and prepayments (payments in advance). You may remember that earlier in this part we discussed some of the accounting …

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Meaning of Depreciation

meaning of depreciation

On the basis of the Fundamental Accounting Assumption of Going Concern, assets are classified as Fixed Assets and Current Assets. Fixed assets are used in the business to drive benefits for more than one accounting period. Periodic profit is measured by charging cost against periodic revenue. Since fixed assets are …

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