380 ACCOUNTING FOR MANAGERS
Throughput contribution Sales revenue less the cost of materials.
Transaction The financial description of a business event.
Transfer price The price at which goods or services are bought
and sold within divisions of the same
organization, as opposed to an arm’s-length
price at which sales may be made to an external
customer.
Turnover The business income or sales of goods and
services.
Unavoidable cost A cost that cannot be influenced at the business
unit level but is controllable at the corporate
level.
Value-based management A variety of approaches (see Chapter 2) that
emphasize increasing shareholder value as the
primary goal of every business.
Variable cost A cost that increases or decreases in proportion
with increases or decreases in the volume of
production of goods or services.
Variable costing A method of costing in which only variable
production costs are treated as product costs and
in which all fixed (production and
non-production) costs are treated as period costs.
Variance analysis A method of budgetary control that compares
actual performance against plan, investigates the
causes of the variance and takes corrective action
to ensure that targets are achieved.
Weighted average cost of
capital
See cost of capital.Working capital Current assets less current liabilities. Money that
revolves in the business as part of the process of
buying, making and selling goods and services,
particularly in relation to debtors, creditors,
inventory and bank.
Work-in-progress Goods or services that have commenced the
production process but are incomplete and
unable to be sold.
Zero-based budgeting A method of budgeting that ignores historical
budgetary allocations and identifies the costs
that are necessary to implement agreed
strategies.