Lecture 1

Question 1

Difference b/t management and financial accounting

Answer 1

Management: internal, future, relevance to decisions, timeliness, segments of org, unregulated, not mandatory
Financial: external, historical, verifiability, precision, whole org, regulated, mandatory

Question 2

Short term versus long-term

Answer 2

Short= costs and inputs are fixed
long = cost and inputs are variable

Question 3

What is cost management?

Answer 3

Actions management take:

• in the short and long run
• planning and controlling of costs
• that increase value for customers and lower costs of products

Question 4

What is cost accounting

Answer 4

Cost accounting: measures and reports financial and non-financial info related to the org’s acquisition and consumption of resources

Question 5

How is cost accounting related to both financial and management accounting?

Answer 5

Cost accounting provides information to both management and financial accounting. Some information it measures is used in in management accounting to make management decisions whilst other information is used to inform external stakeholders

Question 6

Distinction and connection between planning and control

Answer 6

Planning is choosing goals, predicting results under various ways of achieving those goals, then deciding how to attain the desired goals.
Control is both the action that implements the planning decision and deciding on the performance evaluation and the related feedback that will help with future decision making.

Question 7

How are cost management, managerial accounting and cost accounting related?

Answer 7

Management accounting produces info to help management make decisions
Cost accounting- focuses on producing info related to the acquisition and consumption of resources.
in order to make the right cost management decisions management and cost accounting info is needed

Question 8

Six step framework for decisions

Answer 8

1) clarify the decision problem
2) Specify the decision criteria
3) Identify realistic alternatives
4) Collect relevant information
5) Evaluate and compare costs and benefits of each
6) make a decision

Question 9

Cost v Benefits

Answer 9

analysing whether it is cost effective to take a particular path and whether the benefit outweighs the cost.

Question 10

What is the goal of cost management?

Answer 10

to increase customer value and/or lower cost throughout the value chain

Question 11

Short run and planning

Answer 11

getting the most out of available resources

Question 12

Short run and control

Answer 12

are we using resources efficiently

Question 13

long run and planning

Answer 13

matching the supply and demand for resources

Question 14

long run and control

Answer 14

using resources effectively