Fundamentals Of Costing Flashcards
What is cost accounting and what must a cost accountant determine?
Finding the cost of activities undertaken by a business and quantifying the revenue and profits generated by those activities
Cost of goods produced
Costs incurred from operating a department
Revenues earned
What is cost accounting concerned with providing information to assist?
Establishing inventory valuations
Planning
Control
Decision making
What is the difference between financial accounts and management accounts?
FA are for external stakeholders, legal requirement, format by FRS, historical info, every yr
MA are for internal stakeholders, not legal, no format, historical/future info, any period
What are production and non-production functions?
PF - concerned with production of goods
NF - admin, marketing
What can the production function be split into?
Production department
Service department
What is a cost object?
Anything for which we are trying to ascertain the cost including unit of production/service, department or function for a certain period, a project
What is a cost unit?
One unit of the product or service that a business sells/provides to customers
What are some cost unit examples?
One thing
Patient per day
Meal served
Audit performed
Chargeable hour
What are composite cost units?
Cost units made up of 2 parts
What is the cost of one unit made up of?
Materials, labour, other expenses
What is a direct cost?
A cost that can be traced in full to the cost unit
What are the 3 types of direct cost?
Direct materials, direct labour, direct expenses
Add together for a prime cost
What are indirect costs?
Production overheads - included when calculating production cost of one unit (electricity bill, supervisory salaries)
Non-production overheads - not included in production cost of one unit (salaries)
What is a fixed cost?
Constant cost that will remain unchanged
As volume of output increases, cost per unit decreases
What is a variable cost?
Increases or decreases as activity increases or decreases
Y=X line
As volume of output increases, cost per unit stays the same
What is a semi-variable cost?
Has a fixed and variable element
What is the relevant range and stepped costs?
The range of activity levels within which assumed cost behaviour patterns occur.
Adding additional things at same price
What are controllable and uncontrollable costs?
Can be influenced by management decisions
Cannot be affected by management
What is the definition of sustainable development/ corporate responsibility/ governance?
Process we achieve sustainability
Actions, activities, obligations in achieving sustainability
Organisations managed and controlled by senior officers
What are the 3 key elements of sustainability?
Social
Environmental
Economic
What must a business consider with ESG?
Impacts - decisions affect environment
Dependencies - ESG in business
Double materiality - materially affecting business and how business materially impacts people
What are the global initiatives to promote sustainable development?
Taxes and subsidies
Voluntary codes
Stakeholder engagement
