Chapter 1 Flashcards
Compare the………. of financial and managment accounts.
- Purpose
- Legal requirement
- Format (body)
- infomation provided
Give 2 examples of cost objects
- A operating theatre in a hospital
- A branch of a highg street bank
Elements of costs are NOT oporaing costs
Define the following concepts:
- cost object
- cost centre
- cost unit
- composite cost unit
- What are driect costs (prime costs)?
- Give 3 examples of direct costs
- Costs that can be traced in full to a unit cost.
- Direct material cost, Direct laybour cost & direct expenses e.g licence fee per table.
- What are indirect costs (overheads)?
- Give 3 examples of indirect costs?
- Costs that can not be directly traced to a cost unit.
- Indirect material costs - Glue used that may have been spread across several proucts
Indirect Laybour costs - supurvisor wages of someone covering multiple projects. / Overtime due to a heavy workload (not caused by one job)
Indirect expenses - rent of factory
- What are variable production overheads?
- What are fixed production overheads?
- Product costs that vary with units sold - e.g electricty used → they will always be included in the stock value
- Product or period costs - e.g factory rent → not always included in stock value.
- included in stock value = product cost
- expensed within the year = period cost
- What are non production overheads?
- Give examples of these
- Expenses relating to the year not included in the stock value.
- Admin costs, seeling costs (costs incured raising sales -advertising), distribution costs
Cost behaviour
- What is a fixed cost?
- how is cost per unit effected by the activity level of a fixed cost?
- A cost to the business that doesnt change for a period of time - e.g rent, salaries
- Fixed costs per unit of activity will fall as activity level increases as the cost id spread over more units. (increased hours worked)
Cost behaviour
What is a varaiable cost?
- Variable costs per unit of activity remain constant as the activity level changes.
- Total varaible costs will increases as activity level increses.
- E.g 1m wood at 4m remains £4 irrispective of how mny metres brought. For 20m the cost will be £80.
Drawing graphs show how the following chang with activity level…
- Fixed costs in total
- Fixed costs per unit
- Variance costs in total
- Varaible costs per unit
- What is a semi-variable cost (mixed cost)?
- Draw a graph to show this
A cost that has both fixed and variable elements → e.g. aphone bill which compramised of both fixed line rental and the variable component of cost of calls made.
- What is a stepped fixed cost?
- Use a graph to show this
- What is responsilbility accounting?
- What is a responsibility centre?
- What are controllable cost?
- What are uncontrollable cost?
To comply with ethical standards, what should managment accounts be?
ICEAW exemplifies which theroretical approach to ethical codes?
A framework based approach
Why would lease ayments not be the concern of a supervisor in a productions department?
They are the responsibility of the finance department
