An activity cost pool is a collection of all the costs incurred in performing a particular activity. The activity cost pool is then used to allocate those costs to the products or services that benefited from the activity. This provides a more accurate picture of the true cost of each product or service. What is … Read more
A promotional budget is an estimate of the costs associated with promoting a product or service. This can include advertising, public relations, and other marketing activities. The budget is typically created by businesses before they launch a new product or service, in order to ensure that they have the funds necessary to generate interest and … Read more
Work-in-progress (WIP) is a term used in accounting to describe the value of unfinished goods. These goods are often still in the production process and have not yet been completed. The value of WIP represents the cost of the raw materials, labor, and overhead associated with the production of these goods. WIP can be a … Read more
What are cash and cash equivalents? cash and cash equivalents are assets that can be readily converted into cash. Common examples include cash on hand, checking and savings accounts, short-term investments, and money market instruments. What is CCE in finance? CCE, or cost of capital employed, is a financial metric used to measure the efficiency … Read more
The term “absolute percentage growth” refers to the percentage increase in a value over a period of time. In order to calculate absolute percentage growth, you need to know the starting value and the ending value. The formula for absolute percentage growth is: ((Ending value – Starting value) / Starting value) * 100 For example, … Read more
Repo 105 is an accounting technique that Lehman Brothers Holdings Inc. used to temporarily remove up to $50 billion of assets from its balance sheet in the months leading up to its 2008 bankruptcy. The technique involved selling securities to an investment bank and then immediately agreeing to buy them back at a higher price, … Read more
Other current assets (OCA) are those assets which are not classified as either cash or investments, but which are still considered to be liquid and capable of being converted into cash within one year. Common examples of OCA include accounts receivable, short-term loans receivable, and prepayments. The term “other current assets” is used in contrast … Read more
How to Calculate Cost-Volume-Profit (CVP) Analysis What is the formula of fixed cost? There is no one formula for fixed cost, as it can vary depending on the business and the specific costs involved. However, fixed costs are generally those costs that do not fluctuate with changes in production or sales volume, such as rent, … Read more
Additional paid-in capital (APIC), also known as share premium, is the amount of money paid to a company by investors for shares that are worth more than the par value of the shares. The APIC account is a component of a company’s equity and is reported on the balance sheet. APIC is created when a … Read more
Cookie jar reserves are funds that a company sets aside in order to cover future expenses. The funds are not earmarked for any specific purpose, but are available to be used at the company’s discretion. Cookie jar reserves can be used to cover a wide range of expenses, including unexpected costs, new product development, and … Read more
