Intro to Management Accounting Flashcards
Purpose of Management Accounting
Help managers run and improve the business, by planning, evaluating, controlling
Data
Unprocessed information with no clear meaning
Information
Processed data
Qualities of good information
ACCURATE mnemonic(Accurate, Complete, Cost Effective Understandable, Relevant, Accessible, Timely, Easy to use)
Main Areas of Management Accounting
- Costing
- Planning
- Decision making
- Control
- Evaluation
Costing
Defining the cost of producing an item
Planning
Plan how many staff are required
Evaluation
Compare performance against budgets and targets
Primary Data
Data collected for a specific purpose
Secondary Data
Data that has been collected for some other purpose but we use for our own purpose
Internal data
Data collected from our own records. Main source of primary data
External Data
Data collected from other sources eg internet
Sampling methods
- Random sampling
- Systematic sampling
- Stratified sampling
- Multi-stage sampling
- Cluster sampling
- Quota sampling
Random Sampling
Every item has an equal chance of being selected
Systematic Sampling
Select nth from every eg 10th item in a population
Stratified Sampling
Split population into groups and select at random
Ways of presenting info
- Tables
2.Charts and graphs
Cost classification
Arrangement of cost items into logical groups eg nature or function
Cost Unit
A unit of product related to the costs of a bsuiness
Direct cost
Costs which can be identified and allocated to a particular product cost unit direct materials, direct labor
Indirect production costs(overheads)
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
Total Production Costs
Total Production Costs= Total Direct Costs + Overheads
Types of cost behavior
- Variable Costs
- Fixed costs
- Stepped fixed cost
- Semi-variable costs
Variable cost
Varies directly with output. eg direct costs. but variable cost PER UNIT remains constant
