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Advantages of standard costing 1) Measuring efficiency: standard costing is a yardstick for measuring efficiency. The comparison of actual costs with standard costs enables t
A company is preparing a value in use calculation for a factory building and the equipment used to make a particular product. It has prepared cash flows for the next five years fro
Carrying costs of inventory These are costs incurred because the firm has decided to maintain inventories. They generally consist of: • Stock-out costs • Insurance co
Proprietary ratio/ equity ratio Meaning: the ratio measures a relationship among proprietor's funds and the total assets. Objective: the objective of computing this ra
This is a most familiar form of medium term financing in obtaining plant and vehicles, machinery etc. In hire purchase transactions, the purchaser of goods will obtain the possessi
Explain Solvency ratios The term solvency refers of the ability of a concern to meet its long term obligations. The long term indebtedness of a firm include debenture holders,
distinguish between cost unit and cost centre
Explain product cost Product costs are those costs which are associated with and directly identifiable with the product. In other words, which are assigned to the product are p
Transition probabilities These are the probabilities of moving from one state to another in the next time period. Usually they are written in the form of a probability matrix.
Logan Products computes its predetermined overhead rate annually on the basis of direct labor hours. At the beginning of the year, it estimated that 39,000 direct labor-hours would
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