Lead Time – Meaning, Importance, How to Improve and More
Lead time is an essential concept for a manufacturing organization. It is the amount of time between the start and completion of a process or the time between ordering …
Costing Terms
Relevant Cost vs. Irrelevant Cost – All You Need to Know
Relevant and Irrelevant costs are the classification of cost based on their importance. Cost data is vital for a business as it helps in decision making regarding maximizing profit …
Conversion Cost – Meaning, importance, Formula and More
Conversion cost is a combination of all the direct and indirect production costs that a company incurs to convert raw material into finished goods. It includes direct labor costs …
Backflush Costing – Meaning, Process, Drawbacks and More
Backflush Costing or backflush accounting is a product cost accounting approach that is very different from the traditional costing system. Under this system, the costing process is delayed until …
Target Costing – Meaning, Process, Benefits and More
Target Costing is a management technique that assists a business in deciding the prices based on external factors. These factors include competition, the presence of switching costs for the …
Cost Hierarchy – Meaning, Levels and Example
Cost Hierarchy is a classification system that assists in the allocation of costs. It helps to allocate costs more precisely and is primarily used in ABC (activity-based costing) system. …
Cost Estimation Methods – All You Need To Know
Estimating cost is one of the toughest things to do, but it is an essential part as well. In the absence of a cost estimate, it would be challenging …
Joint Products – Meaning, Characteristics and Accounting
Joint products are the products or items that use the same production process and input at the same time. Since they use the same process, it is impossible to …
Budgeting Cycle – Meaning, Importance, Phases and More
Budgeting Cycle or budget cycle refers to the steps or phases that a company or an individual or a government organization needs to go through to come up with …
Activity-Based Management – Meaning, Objectives, Drawbacks and More
Activity-Based Management or ABM helps a business to analyze or evaluate the cost of business activity (or activities) based on the value addition that the activity brings. In simple …
