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Management Accounting > Semester 1 > Flashcards

Semester 1 Flashcards

1
Q

What is the purpose of information systems?

A
  1. Process data
  2. Store data/info
  3. Communicate info
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2
Q

What do information systems produce output for?

A

-Planning
-Recording + processing transactions
-Monitoring + measuring performance
-Controlling
-Decision making

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3
Q

Types of information systems

A

TPS (Transaction processing system)
MIS (Management info system)
EIS (Executive info system)
ERP (Enterprise resource planning)
CRMS (Customer relationship management software)

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4
Q

Information levels

A
  1. Strategic: LT Decisions, Uncertain, external sources
  2. Tactical: Activity summary, medium term planning, internal
  3. Operational: V detailed, lots data, ST Decisions, internal
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5
Q

What is big data?

A

Large volumes of raw data, analysed to reveal patterns

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6
Q

What is a cost object?

A

Any activity that requires a separate measurement of costs

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7
Q

Name the manufacturing costs

A
  • Direct materials
  • Direct labour
  • Manufacturing overheads
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8
Q

Name the non-manufacturing costs

A
  • Administrative overheads
  • Marketing overheads
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9
Q

What is equation for prime cost?

A

Direct material + Direct labour

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10
Q

What is equation for conversion cost?

A

Direct labour + manufacturing overheads

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11
Q

Is a supervisor salary an indirect or direct cost?

A

It depends on cost object

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12
Q

What is a product cost?

A

A manufacturing cost
An asset (inventory) in BS when unsold
An expense in IS when sold
Included in inventory valuation

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13
Q

What is a period cost?

A

It’s a non-manufacturing cost
It’s an expense in IS
Not included in inventory valuation

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14
Q

Do total variable costs increase or decrease over time?

A

Increase

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15
Q

Do variable costs per unit increase or decrease over time?

A

They remain the same

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16
Q

Do total fixed costs increase or decrease over time?

A

They remain the same

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17
Q

Do fixed costs per unit increase or decrease over time?

A

Decrease

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18
Q

What is a semi-variable cost?

A

Part fixed part variable

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19
Q

What is a step fixed cost?

A

Remains fixed until a certain point

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20
Q

What is FIFO?

A

Oldest stock sold first, so inventory valued @ newest price

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21
Q

What is LIFO?

A

Newest stock sold first, so inventory’s valued at oldest price
Not allowed by IAS 2

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22
Q

What is WAC?

A

No order pattern for items sold, so inventory’s valued at same price (average price)

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23
Q

What is capital expenditure?

A

Big 1 off asset purchase
Used to generate revenue over long term
E.g property, machinery

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24
Q

What is revenue expenditure?

A

Daily, ongoing costs to allow business to operate
E.g rent, wages, admin fees

25
Q

High low method

A

Variable costs = difference in cost/ difference in output

26
Q

High low method

A

Variable costs = difference in cost/ difference in output

27
Q

What is Job order costing?

A

Method used to calculate costs of individual products/batches
E.g mattress company who have lots of different products

28
Q

What is process order costing?

A

Method used to calculate costs for mass production of 1 product
E.g paper company just making paper

29
Q

What is process order costing?

A

Method used to calculate costs for mass production of 1 product
E.g paper company just making paper

30
Q

OAR Plant Wide Rate method + features

A

Simple but inaccurate
Applies overheads direct to production department (allocation bases are labour + machine hours)
Only valid for businesses with a few products

31
Q

OAR 2 Stage allocation process

A

Complex but more accurate
Applies to traditional and ABC systems

32
Q

Contribution sales ratio

A

Contribution / selling price x 100

33
Q

Contribution per unit

A

Selling price - variable cost

34
Q

Break even point definition

A

Number of units needed to be sold to cover fixed costs
TR=TC

35
Q

BEP (in units)

A

Fixed costs/CPU

36
Q

Margin of safety (revenue)

A

Total revenue- BEP revenue

37
Q

Margin of safety (%)

A

Actual units - BEP units
———————————
Actual units

38
Q

BEP revenue

A

Fixed cost/ CS ratio

39
Q

Does change in total sales volume change the BEP?

A

No

40
Q

Target profit units needed

A

Fixed costs + target profit = no. of units
———————————-
CPU

41
Q

Marginal costing aspects

A

Cost of producing 1 extra unit
Used for ST decision making
Total variable costs to produce 1 extra unit
Not acceptable under IAS2

42
Q

Absorption costing aspects

A

All costs of manufacturing 1 product
Used to calculate inventory valuation and profit
Acceptable under IAS2

43
Q

If there’s a limiting factor what do you prioritise? And if there’s not ?

A

Yes- prioritise CPU of limiting factor
No- prioritise CS ratio

44
Q

Draw a break even chart

A

Check internet

45
Q

Assumptions of limiting factor theory

A

CPU is consistent for each product
Production process is linear + resources used at constant rate
Resources availability is limited + must be allocated efficiently

46
Q

Functions of a budget

A

Planning
Coordinating
Communicating
Motivating
Evaluating performance

47
Q

Functions of a budget

A

Planning
Coordinating
Communicating
Motivating
Evaluating performance

48
Q

Different types of budget

A

Participatory (managers involved at all levels)
Zero based budget (start with blank sheet)
Incremental budget (start with last years budget)
Rolling budget (constantly adjusting same budget)

49
Q

Different types of budget

A

Participatory (managers involved at all levels)
Zero based budget (start with blank sheet)
Incremental budget (start with last years budget)
Rolling budget (constantly adjusting same budget)

50
Q

Order of budgets

A

Sales budget
Production units , Labour utilisation
Materials usage
Materials purchase
Cash budget

51
Q

Write out the steps in each of 4 budgets

A

Production units:
Sales
- opening inv
+ closing inv
——————-
Production units

Materials usage:
Production units
Usage in kg or m
————————
Cost of usage

Labour utilisation:
Production units
Labour hours
————————
Cost of hours

Materials purchase:
Production units
-opening inv
+ closing inv
———————-
Cost of purchase

52
Q

Flexed budget

A

Budgeted costs with actual units

53
Q

Sales margin volume variance

A

(Actual units-budgeted units) x budgeted cpu
Or different in profit between flexed and normal budget

54
Q

Sales margin price variance

A

(Actual selling price - budgeted selling price) x actual units

55
Q

Labour efficiency variance

A

[ (budgeted labour hours x actual units) - actual total labour hours ] x budgeted labour rate

56
Q

Labour rate variance

A

(Budgeted labour hourly rate £ - actual labour hourly rate £) x actual total labour hours

57
Q

Material usage variance

A

[ (Budgeted material quantity x actual units) - actual total material quantity ] x budgeted price per m

58
Q

Material price variance

A

(Budgeted cost per m of material - actual cost per m of material) x actual total material quantity

Management Accounting (2 decks)

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