Intro to Management Accounting

Question 1

2 users of accounting information

Answer 1

Internal parties: Parties within an organization like managers

External parties: Parties such as stakeholders, goverments

Question 2

Management accounting

Answer 2

Legal requirements - private info
Business operation - small unit planning
Accounting principles - No rules
Time dimension - Forward looking
Report frequency - Daily, weekly,etc

Question 3

3 functions of management accoutning

Answer 3

Scorekeeping: Recording information about alternatives

Problem Solving: Comparing various alternatives and making a decision

Attention Directing: Highlighting what went wrong/right with the decision

Question 4

4 ways to Customer satisfaction

Answer 4

Cost efficiency
Continuous improvement
Total value chain analysis
Employee empowerment

Question 5

Cost object

Answer 5

Is anything that a cost measurement is assigned to such as services or departments

Question 6

Direct vs Indirect costs

Answer 6

Direct costs are costs that are traceable to the cost object. (cost tracing)

Indirect costs are costs that cant be traced to the cost object. (cost allocation)

Question 7

Prime costs

Answer 7

Total of all direct costs

Question 8

Manufacturing overhead

Answer 8

Total of all indirect costs

Question 9

Product costs vs period costs

Answer 9

Product costs is any cost related to producing/ buying/acquisition of the service or product. It can be direct and indirect

Period costs: These are any cost that goes into selling the product.

Question 10

Fixed costs vs Variable costs

Answer 10

Fixed costs: costs that are constant regardless of changes in output.
(Unit -changes, Total - doesn’t)

Variable costs: costs that vary in direct proportion to the volume of activity
( Unit - fixed, Total - changes)

Question 11

Graphs

Answer 11

Graphs - FC, VC, Mixed of both, Semi fixed