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Explain the cost According to controllability:
Controllable cost: this is a cost which can be inclined by the action of a specified member of an undertaking. The organization is divided into departments or responsibility centres each managed by a head. These costs of a particular department or centre are guided by the person in charge of the department. The costs which can be controlled by a specified member who is generally an important link in the management are the controllable costs. The head of a cost centre or a department has control over variables costs only which include prime cost and other variable overheads. So the controllable costs are the variable costs.
Uncontrollable cost: it is a cost which cannot be inclined by the action of a specified member of an undertaking. Uncontrollable is generally the fixed cost, the control of which does not lie within the providence of a member of a member of an undertaking. The change in the fixed cost is a matter to be decided at the top level of the management depending upon the policy of the undertaking
INTERPRATATION OF VARIANCE Controllability, Materiality and Trend are the interpretation of variance. The point of comparing flexed budget and real figures is to see what corre
Explain the Objectives of management accounting? 1. Planning and policy formulation: the object of management accounting is to supply necessary data to the management for fo
Steps involved in ratio analysis The following are the four steps involved in the ratio analysis: 1) selection of relevant data from the financial statement depending upon t
Funded debt to total capitalization ratio The ratio establishes a link among the long term funds raised from outsider and total long term funds available in the business. The
Significance points of Variance The following significant points must be kept in mind: Controllability: Controllability should also influence the decision whether t
What the traffic can bear pricing Pricing based on what the traffic can bear is not a sophisticated method. It is used by retail traders as well as by some manufacturing firms.
Difference between Direct labour and Indirect labour Direct labour:- Labour which plays an active and direct part in the production of a particular commodity is called di
Explain variable cost and fixed cost Variable costs: costs that vary almost in the direct proportion to the volume of production are known as variable costs. The examples of
implications of applying accounting concepts wrongly
What is Direct material cost variance It can be defined as the difference between the standard costs of direct material specified and the actual cost of direct material used.
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