All Cards Flashcards
What is Managerial Accounting?
Provides info for managers of firms who direct/control its operations
What is the Management Cycle?
Formulating long/short term plans –> implementing plans –> measuring performance –> comparing actual to planned performance
What are the roles of a Management Accountant?
- Developing Plans, analysing alternatives
- Communicating plans to key personnel
- Evaluating performance
- Reporting results of activities
- Accumulating, maintaining, processing a firm’s financial/non-financial info
What 6 things must useful information be?
ARTUCC
- Accurate
- Relevant
- Timely
- Understandable
- Comparable
- Complete
What are the drivers of management accounting change?
- Increasing complexity/size of firms
- Increased emphasis on quality
- Rapid development and implementation of technology
- World-wide competition
- Sustainable development
What did Management Accounting use to focus on and what does it focus on now?
Used to:
- Cost efficiency
- Effective cost management
Now:
- Manage Value
- Manage environmental sustainability
What are CIMA and ACCA?
Organisations that have written codes of ethics which serve as guides for employees
What is the CIMA code of ethics?
integrity and objectivity
Integrity:
- Truthfulness
- Straightforward
- Honest
- Fair dealing
Objectivity:
- Communicate unfavourable + favourable information
- Refuse gifts/bribes/favours that might influence behaviour
What is a Cost?
A measure of resources used or given up to achieve a stated purpose
What is a Cost Objective?
Any activity for which a separate measurement of costs is required
What is a cost object?
Anything for which cost data are desired
What is cost classification?
Grouping together costs which show the same attributes, relative to a standard cost objective
What is a direct cost?
A cost that varies directly in relation to a change in activity
What is manufacturing overhead?
Costs that cannot be traced directly to specific units produced
What is a prime cost?
equation
= Direct materials + Direct labour
What are full production costs and full costs?
equations
FPC = prime cost + production overhead
FC = FPC + selling cost + general/administrative costs
What are Product costs?
Costs incurred in purchasing/making the product inc. direct materials/labour and manufacturing overhead
What are period costs?
All other costs, not inc. product costs
What is activity base?
A measure of the event causing the incurrence of a variable cost and and what drives this cost to rise/fall
What is a committed fixed cost?
Long term fixed costs that can’t be reduced in the short term
What is a discretionary fixed cost?
Can be altered in the short-term by correct decisions
What is an opportunity cost?
Potential benefit given up when 1 alternative is selected over another
What is a sunk cost?
Cost that cannot be changed by any decision, not differential costs and should be ignored when making decisions
What are the 2 cost Centres?
- Production cost centre
- Service cost centre
Overheads are assigned to departments or cost centres
What is a pre-determined overhead rate?
Set rate which absorbs or ‘picks up’ all overheads attributable to make the cost centre
How is the pre-determined overhead rate calculated?
equation, estimated
= Estimated OH consumption for period / estimated production capacity for period
What factors are used for calculating absorption rates?
- Machine hours
- Direct labour hours
- Direct wages
- Direct materials
- Prime cost
- Number of units
How would direct labour hour rate be calculated?
hint: estimated
= estimated OH for year / estimated direct labour hours for year
What is a material requisition form?
Authorises use of materials on a job
Records: description, quantity, unit cost, total cost etc.
What are time tickets?
Record time spent on each job and cost of labour for each employee