ADP RUN articles

(b) A price standard is the price that is paid for acquiring raw material or other resources for the production of goods or services. If the price standard is less than the actual price, it gives rise to price variances. (a) A quantity standard is the budgeted amount of raw material, labor or input to be used in producing a unit of product or service. A quantity standard is used to compare the actual quantity used in production at the year-end.

Price standard is the price that should pay for […]

When a company purchases goods on credit, it discusses the repayment terms with the supplier. Usually, suppliers allow a days period by which the company must settle its obligations. However, some suppliers may also offer a purchase discount if the company repays its debt before that period.
However, the supplier also offers a purchase discount of 5% on the transaction if Red Co. pays the amount in 10 days. Red Co. repays its supplier in 8 days, availing of the purchase discount. A purchase di […]

Then, the businesses agree to purchase the products and services, having several shortcomings. After that, the buyer accepts a credit note from the distributor to compensate for the defects. The allowance journal entries are recorded in both accounts after the process is completed. For instance, a buying allowance is supposed to offer a certain discount based on its bill payment.

Then, the businesses agree to purchase the products and services, having several shortcomings.
The purchases retur […]

NGOs (non-government organizations), a type of nonprofit, are voluntary groups or institutions with a social mission that doesn’t have a connection to a government. Nonprofit organizations include international groups like the Red Cross and Doctors Without Borders, as well as organizations based in the U.S., like churches. National government departments are responsible for specific policy areas, such as education, defence or transport. They often have offices in multiple locations acros […]

Eric is a staff writer at Fit Small Business and CPA focusing on accounting content. He spends most of his time researching and studying to give the best answer to everyone. With a discount of 3%, the customer would owe $485 rather than the original invoice amount of $500. Not every opportunity for an early payment discount is used successfully – for internal or external reasons.
A prompt payment discount is a way to save money that doesn’t require the business to do anything except wha […]

Thus, the operational plan of a business tends to drive the types of price variances that it incurs. In cost accounting, price variance comes into play when a company is planning its annual budget for the following year. The standard price is the price a company’s management team thinks it should pay for an item, which is normally an input for its own product or service. At this point, favorable price variance occurs when a company puts an actual price higher than a standard price. In tu […]