Financial Concepts for Loans and Real Estates

If you are struggling with your debts, then you may benefit from financial support.

Many organisations offer free financial support to people finding their finances difficult to manage. One example of this support is help with budgeting.

Budgeting is all about understanding and managing your finances – in other words, keeping control of your monthly income (the money you earn/receive) and expenditure (the money you spend/pay out).

Your total income should include everything you earn/receive: your salary, benefits, grants, etc. Your total expenditure should include your ‘priority’ debt repayments – for example, your mortgage/rent payments – and your day-to-day living expenses. You should not include payments to your ‘non-priority’ debts (credit cards, store cards, etc.) at this point.

Once you have noted down your total income and total expenditure, you should be able to work out your disposable income. This is done by simply subtracting your total expenditure from your total income. Your disposable income is the amount of money available for non-priority debt payments and, if there is any left over, for saving and non-essential spending.

Now that you have your disposable income, you should make a list of all your non-priority debt repayments (unsecured loans, credit cards, etc.) and ask yourself: Is it enough to cover all the repayments?

If it isn’t, then you really should consider seeking further financial support to help you address the problem. You may be advised to look into a professional debt solution.

Even if you do find that your disposable income is enough to cover the cost of servicing your debts, you may save yourself a lot of money in interest if you ‘overpay’ your monthly payments – in other words, make more than the required minimum monthly payment.

If you can do this, you’ll clear your debts faster – and that means you’ll pay less interest in the long run.

After a huge discussion on financial chapter we have come to “Standard Costing” chapter to discuss about it. About it management says that it is the standard costing is an important tool to planning and cost control.

Objectives of Standard Costing:

Meaning of Standard Costing

Nature of Variance Analysis

Calculate Variances

According to the ICMA, London Standard Cost is, “the pre-determined cost based on technical estimate for materials, labour and overhead for a selected period of time and for a prescribed set of working conditions.”

You should know that Standard Cost is different from “Estimated Cost” and it express what should be the cost, in advance of actual production.

Along with we should know about Standard Costing also. The definitions of Standard Costing also look from ICMA, London, “the preparation of standard costs and applying them to measure the variations from standard costs and analyzing the causes of variations with a view to maintain maximum efficiency in production.”

Standard Costs involves in:

a. Ascertainment of standard costs for each element costs – material, labour, overhead
b. Use of standard costs as a guide and measure of actual costs
c. Measurement of actual costs
d. Comparison of actual costs with the standard costs
e. Measurement and analysis of deviations of actual costs from standard costs

After having understood about the standard costs we should proceed with Variance Analysis. According to the MBA book of SMU variance is, “the difference between a standard cost and the actual cost incurred during a period.

In the variance analysis mainly two elements involved which are:

Measurement of individual variances and
Identification of causes of each variance

We can illustrate here some formula about variance:

Material usage variance = (Standard Quantity – Actual Quantity) x Standard Price

[MUV = (SQ –AQ) x SP]

Computing mix variance:

Material mix variance = [standard cost of standard mix] – [standard cost of actual mix]

Or

[Standard mix – actual mix] x standard rate per unit

Or

[Revised standard mix of actual input – actual mix] x Standard price.

I think now all the things are clear about the standard costs and variance from the financial book. I have already explained the entire chapter before much clearly with some example. I think to publish here about some new chapter of finance and loans also.