Definition: Variable Cost is the method that assumes the main cost of products is direct labor, direct material, and variable manufacturing overhead. These costs are fixed in units and variable in total. In other words, it is the cost that is variably attributed to the cost of the product. The variable Cost Concept is that […]
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Definition: The income statement is one of the five financial statements that report and present an entity’s financial transactions or performance, including revenues, expenses, net profit, or loss, and other P&L Items for a specific period of time. This is also known as the statement of financial performance because it shows how the entity financially
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Definition: Financial accounting is one of the essential functions of Financial Management in the Financial Department or Financial Division. Because of its usefulness and necessity, we can say that this function is one of the strategic functions of the entity. This function is responsible for preparing financial reports, controlling the financial position and cash flow,
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Definition: Operating expenses are the expenses incurred in the entity for its normal operational purposes and activities that generally include both the cost of products or services and sales & administrative expenses. Operating expenses are generally defined when identifying and assessing the theentity’ss operating profits. Like other income statement items, these expenses are recorded in
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Definition: The contribution margin is basically the sales price less variable cost. The contribution margin in percentages is calculated by sales price less variable cost and then divided by sales price. Mostly we use net sales to calculate the contribution. Variable costs are direct costs, including direct materials, direct labor, and other direct costs. The total
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Definition of Gross Profit Gross profit is the profits after the deduction of the Cost of Good Sold from Revenues or Sales Revenues for a specific period. It is the entity’s profit after the conclusion of the cost of goods or services. Gross profit is reported in the income statement of the entity and it
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