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Definition of decision variable
an unknown item for which a linear programming
a number (prefaced as a multiplier
The decision regarding how an institution's funds should be distributed among the
decision as to which real assets the firm should acquire.
A random value that can take any fractional value within specified ranges, as
the process of choosing among the alternative
Method of representing alternative sequential decisions and the possible outcomes from these decisions.
Diagram of sequential decisions and possible outcomes.
an unknown variable that is to be predicted
A random variable that can take only a certain specified set of discrete possible
A value determined within the context of a model.
A variable whose value is determined outside the model in which it is used. Also called
a judgment made regarding the method
decision as to how to raise the money to pay for investments in real assets.
decisions concerning the liabilities and stockholders' equity side of the firm's balance
a variable that, when changed, will
a judgment about which assets will be
decisions concerning the asset side of a firm's balance sheet, such as the decision to
a critical factor that management believes will
a decision that compares the cost of
decisions concerning the operation of the firm, such as the choice of firm size, firm
Mutually exclusive investment decisions
Investment decisions in which the acceptance of a project
Normal random variable
A random variable that has a normal probability distribution.
see make-or-buy decision
the second decision made in capital project evaluation in which projects are ranked according to their impact on the achievement of company objectives
A function that assigns a real number to each and every possible outcome of a random experiment.
the first decision made in evaluating capital
Security selection decision
Choosing the particular securities to include in a portfolio.
Costs that have both fixed and variable components.
a variable used in a linear programming problem
special order decision
a situation in which management must determine a sales price to charge for manufacturing or service jobs outside the company’s normal production/service market
a variable used in a linear programming problem that represents overachievement of a minimum requirement; it is associated with greater-than-or-equal-to constraints
A value determined within the context of a model. Also called endogenous variable.
Annuity contracts in which the issuer pays a periodic amount linked to the investment
A form of annuity policy under which the amount of each benefit is not guaranteed or specified. The amounts fluctuate according to the earnings of a separate investment account.
A cost that is directly proportional to the volume of output produced. When production is zero,
A cost that increases or decreases in proportion with increases or decreases in the volume of production of goods or services.
a cost that varies in total in direct proportion
A cost that changes in amount in relation to changes in a related activity.
variable cost ratio
the proportion of each revenue dollar
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.
a cost accumulation and reporting method
Costs that change as the level of output changes.
Those that vary with the amount of goods you produce or sell. These may include utility bills, labor, etc.
Expenses that change with changes in either sales volume
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the
variable overhead efficiency variance
the difference between budgeted variable overhead based on actual input activity and variable overhead applied to production
variable overhead spending variance
the difference between total actual variable overhead and the budgeted amount of variable overhead based on actual input activity
Variable price security
A security, such as stocks or bonds, that sells at a fluctuating, market-determined price.
Variable rate CDs
Short-term certificate of deposits that pay interest periodically on roll dates. On each roll
Variable rate loan
Loan made at an interest rate that fluctuates based on a base interest rate such as the
Variable rated demand bond (VRDB)
Floating rate bond that can be sold back periodically to the issuer.
The margin that results when variable production costs are subtracted
gross margin, or gross profit
This first-line measure of profit
Operating expenses that vary in proportion to
a process of determining the amount of change that must occur in a variable before a different decision would be made
The profit per unit sold of a product after deducting product
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