Introduction Flashcards
What is cost accounting?
Branch of management accounting that deals with the determination and ascertainment of operation costs
What activities are included in operations for cost accounting?
Operations include production operations, service operations, and merchandising operations.
What is production in the context of cost accounting?
Production involves the value addition process of converting raw materials into useful final products.
What are service operations in cost accounting?
Service operations involve adding value by offering intangible commodities to customers
What are merchandising operations?
the practice of promoting and selling products to increase sales and create brand recognition
What are some key areas of concern in cost accounting?
Determination and ascertainment of operation costs
Establishment of budgets and forecasting
Pricing decisions
Analysis of cost and revenue variances
Profit planning and ascertainment of profitability
Valuation of production output
What is management accounting?
A branch of accounting and financial management that provides information for managerial planning, organizing, directing, controlling, and decision-making.
Is management accounting intended for internal or external use?
Management accounting is intended for internal use.
What is the role of cost accounting in the ascertainment of costs?
It helps determine the cost of producing goods and providing services, including material, labor, and operation overhead costs.
How does cost accounting contribute to the control of costs?
It tracks cost behavior and devises tools to control costs, enhancing organizational production efficiency
Why is cost accounting important for decision-making?
It provides information for making choices among alternatives, such as whether to manufacture or buy, hire or outsource, expand or diversify, and invest or lease.
How does cost accounting assist in planning?
It supports future-oriented activities like budgeting, reducing risk, and bridging the gap between present and future conditions.
Why is estimation of prices significant in cost accounting?
Businesses use cost accounting to ensure goods and services are priced above production costs to achieve profitability.
What is the importance of cost estimation and forecasting in cost accounting?
It helps determine production trends and forecast future costs and variations.
How does cost accounting help evaluate profitability?
By providing cost and turnover information, it aids in assessing organizational profitability.
What role does cost accounting play in disclosing waste and measuring efficiency?
It uses standard costing and variance analysis to reveal production waste and improve operational efficiency.
How does cost accounting promote continuous improvement?
Through cost control and eliminating irrelevant costs using standard costing and variance analysis
