Intro to Management Accounting

Question 1

Purpose of Management Accounting

Answer 1

Help managers run and improve the business, by planning, evaluating, controlling

Question 2

Data

Answer 2

Unprocessed information with no clear meaning

Question 3

Information

Answer 3

Processed data

Question 4

Qualities of good information

Answer 4

ACCURATE mnemonic(Accurate, Complete, Cost Effective Understandable, Relevant, Accessible, Timely, Easy to use)

Question 5

Main Areas of Management Accounting

Answer 5

1. Costing
2. Planning
3. Decision making
4. Control
5. Evaluation

Question 6

Costing

Answer 6

Defining the cost of producing an item

Question 7

Planning

Answer 7

Plan how many staff are required

Question 8

Evaluation

Answer 8

Compare performance against budgets and targets

Question 9

Primary Data

Answer 9

Data collected for a specific purpose

Question 10

Secondary Data

Answer 10

Data that has been collected for some other purpose but we use for our own purpose

Question 11

Internal data

Answer 11

Data collected from our own records. Main source of primary data

Question 12

External Data

Answer 12

Data collected from other sources eg internet

Question 13

Sampling methods

Answer 13

1. Random sampling
2. Systematic sampling
3. Stratified sampling
4. Multi-stage sampling
5. Cluster sampling
6. Quota sampling

Question 14

Random Sampling

Answer 14

Every item has an equal chance of being selected

Question 15

Systematic Sampling

Answer 15

Select nth from every eg 10th item in a population

Question 16

Stratified Sampling

Answer 16

Split population into groups and select at random

Question 17

Ways of presenting info

Answer 17

1. Tables
   2.Charts and graphs

Question 18

Cost classification

Answer 18

Arrangement of cost items into logical groups eg nature or function

Question 19

Cost Unit

Answer 19

A unit of product related to the costs of a bsuiness

Question 20

Direct cost

Answer 20

Costs which can be identified and allocated to a particular product cost unit direct materials, direct labor

Question 21

Indirect production costs(overheads)

Answer 21

Costs incurred while making a product or service but cannot be traced back to the final product
eg rent of a factory, wages of maintenance men

Question 22

Total Production Costs

Answer 22

Total Production Costs= Total Direct Costs + Overheads

Question 23

Types of cost behavior

Answer 23

1. Variable Costs
2. Fixed costs
3. Stepped fixed cost
4. Semi-variable costs

Question 24

Variable cost

Answer 24

Varies directly with output. eg direct costs. but variable cost PER UNIT remains constant

Question 25

Fixed Costs

Answer 25

Total Costs that remain constant within certain activity levels. If more output, fixed cost PER UNIT will fall

Question 26

Stepped fixed costs

Answer 26

only fixed within certain levels of activity eg rent or supervisor wages

Question 27

Semi-variable costs

Answer 27

Contain both fixed and variable components and re affected by changes in levels of activity eg electricity and gas bills, salesman’s salary

Question 28

Types of responsibility Centres

Answer 28

1. Cost centres
2. Profit centres
3. Revenue centres
4. Investment centres

Question 29

Cost centre

Answer 29

areas where costs are collected eg individual departments or machines

Question 30

Profit centre

Answer 30

Where both costs and revenues are collected

Question 31

Revenue centre

Answer 31

Manager is responsible for the revenue of his division, not cost

Question 32

Investment centre

Answer 32

Manager has responsibility for new capital investment