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Harold Averkamp, CPA, MBA

All 1013 questions have been answered personally by Harold Averkamp, CPA, MBA. Harold is the sole-author of all the instructional content found on AccountingCoach.com.
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Q&A Archive

What is treasury stock?

Treasury stock is a corporation's previously issued shares of stock which have been repurchased from the stockholders and the corporation has not retired the repurchased shares. The number of shares of treasury stock (or treasury shares) is the difference between the number… Read More.

What is sales mix?

Sales mix is the relative proportion or ratio of a business's products that are sold. Sales mix is important because a company's products are likely to vary in their profitability. To illustrate sales mix, let's assume that an automobile company plans to… Read More.

What is discount on bonds payable?

Discount on bonds payable (or bond discount) occurs when bonds are issued for less than their face or maturity amount. This is caused by the bonds having a stated interest rate which is lower than the market interest rate for similar bonds.… Read More.

What are direct materials?

Direct materials are the traceable matter used in manufacturing a product. The direct materials for a manufacturer of dessert products will include flour, sugar, eggs, milk, vegetable oil, spices, and other ingredients in the recipes. In manufacturing, the direct materials are listed… Read More.

What is the coefficient of determination?

The coefficient of determination is a statistic which indicates the percentage change in the amount of the dependent variable that is "explained by" the changes in the independent variables. For example, a manufacturer may have found through the regression analysis of 15… Read More.

What is the contribution margin ratio?

The contribution margin ratio is the percentage of sales, service revenues or selling price that remains after all variable costs and variable expenses have been covered. In other words, the contribution margin ratio is the percentage of revenues that is available to… Read More.

What is relevant range?

In accounting, relevant range refers to a limited span of volume or activity. To illustrate, let's assume that a manufacturer's monthly production volume is consistently between 10,000 and 13,000 units and between 20,000 and 25,000 machine hours. Within this range of activity… Read More.

What is present value?

In accounting, present value likely refers to the amount that remains after future cash amounts have been discounted to an earlier time. (The earlier time is depicted on a timeline as the point 0, which is the beginning of period 1.) The… Read More.

What are indirect manufacturing costs?

Indirect manufacturing costs are a manufacturer's product costs other than direct materials and direct labor. Indirect manufacturing costs are also referred to as manufacturing overhead, factory overhead, factory burden, or burden. Under traditional cost accounting, the indirect manufacturing costs are allocated (or… Read More.

What is an independent variable?

In accounting, an independent variable is ideally a factor that causes a change in the total amount of the dependent variable. In other words, an independent variable should be something that drives a mixed cost to increase or decrease. To illustrate, let's… Read More.