The material usage variance in a standard costing system results from using more or less than the standard quantity of direct materials specified for the actual goods produced. If actual quantity of the input direct materials is more than the standard quantity allowed for the good output, the variance [...] Continue Reading…

In accounting, arrears is used in at least two situations. One use involves the past, omitted dividends on cumulative preferred stock. If a corporation fails to declare the preferred dividend, those dividends are said to be in arrears. The dividends in arrears must be disclosed in the notes (footnotes) [...] Continue Reading…

While both of these are liabilities, Notes Payable involves a written promissory note. For example, if your company wishes to borrow $100,000 from its bank, the bank will require company officers to sign a formal loan agreement before the bank provides the money. (The bank might also require your [...] Continue Reading…

Paragraph 23 of the Statement of Financial Accounting Standards No. 95, Statement of Cash Flows, (Financial Accounting Standards Board, www.fasb.org) requires that “cash outflows for operating activities are: …d. Cash payments to lenders and other creditors for interest…” [Three of the seven members of the FASB at the time [...] Continue Reading…

I suggest that the first step in determining the fixed portion of a mixed cost (a cost that is partially fixed and partially variable) is to graph the data. Label the vertical or y-axis of the graph as Total Manufacturing Overhead (or Total Electricity Cost if you are analyzing [...] Continue Reading…