PowerPoint Slides 1-4 Flashcards
Name 4 things management information is used for:
Planning, Controlling, Decision Making & Scorekeeping
Name the 3 levels of information in order(highest to lowest):
Strategic, Tactical & Operational
Name 5 different business objectives:
Grow, Look after employees, Look after the environment, Make sales to beat competitors and Make profits.
Define planning:
Deciding where the business needs to be in the future
Define controlling:
Is the business on track to get there
Define decision making:
What does the business need to do to get there
Define scorekeeping:
Are we recording what we are spending and receiving
Name the 6 processes (in order) involved in the planning, decision making and controlling process:
Set objectives, Identify alternatives, Make decision, Implement decision, Compare actual & plan, Revise objectives or take control action.
List 8 Qualities of good information:
Accurate Complete Comparable Understandable Relevant Authoritative Timely Economic
What is efficiency?
Doings things well, doing things right & measured by ratios.
What is effectiveness?
Doing the right things, achieving objectives & may be non-financial.
List 4 reasons why we now rely on technology:
Quicker processing, more accurate, more complex calculations can be done and a greater volume of data can be stored.
List 5 reasons why we need to understand costs:
Value our inventories of finished goods Set a price that covers costs Decide how to control costs Forecast future costs Decide which products or departments are profitable
List 7 labour costs:
Salaries Wages Bonuses Overtime and shift premiums Holiday pay Idle time Pension contributions
Why record labour costs?
Ensure each unit gets a fair labour cost
Ensure that we pay the correct amounts to
- Employees
- HMRC
- Pension companies
- Charities, loan companies, insurance etc
List 4 potential advantages of individual/labour incentive schemes:
Lower unit cost (fixed & variable costs as well as labour costs)
Better motivated workforce (better paid & more in control of payment level)
Greater efficiency
Greater productivity
List 4 potential disadvantages of individual/labour incentive schemes:
Quality may suffer
Quality control costs may suffer
Potential behavioural problems as a single standard is unlikely to suit different workers
Uncertainty over labour costs
Management Accountants will provide managers with information which will enable them to..
..increase the value of the firm by acquiring, allocating and utilising resources as efficiently as possible.
List 7 differences between management and financial accountants.
Report to managers of business Internal to organisation Future orientated Can be done for parts of business Not required by Law Not governed by accounting standards Information is more flexible
How do you work out unit production costs?
Production costs / sales
How do you work out unit fixed costs?
Fixed costs / sales
How do you work out average unit costs?
Unit production costs + unit fixed costs
What is production overhead?
All costs that are involved in production but can’t be traced to products.
