Management Accounting Flashcards
What is management accounting
The preparation of management reports that provide info to internal managers making day-to-day decisions
What does management accounting include
budgets, revenue and cost allocation, cost volume refit analysis
What’s a budget
A financial plan reflecting an estimate of all revenues, costs and resources required over a specific period, to achieve an org’s strategic and operational plans
Types of budgets. 4
Static, incremental, rolling, zero based
What’s a static budget
having a set budget for the year that isn’t reevaluated or changed
Rolling budget
recognises nothing stays same anymore, budget is assessed and re evaluated on a constant basis over the next year
Incremental budget
making a slight change year on year in budget
Zero based budget
every budget you have is rebuilt from scratch, can’t use historical figures so must look at from blank starting point
Profit formula in cost volume profit
(Unit price - unit cost) x volume - fixed costs
Unit price formula in cross volume profit
((Profit - fixed costs) / volume) + unit cost
Difference between marginal costing and absorption costing
Marginal costing is based on variable costs of production and doesn’t include fixed costs
Absorption costing includes all kinds of costs
What is cost volume profit
A method of cost accounting that looks at impact the varying cost, volume and price have on operating profit
What’s cvp analysis also known as
Break even analysis
How to find profit/loss from balance sheet
Net assets - equity investment
How to find total reserves on balance sheet
Net assets
Or equity investment + profit/(loss)
