Syllabus A. Management Information Flashcards
Describe the purpose of cost and management accounting?
to provide information for planning, decision making and control
What is cost accounting mainly concerned with?
- preparing statements
- cost data collection
- applying costs to inventory,products and services
The main users of financial accounting information are __________ to an organisation.
external
In management accounting, ______________ decides the best way to present information.
management
Financial accounting presents __________ information
historical
The purpose of management accounting is to aid in , __________ decision-making and ___________.
planning; control
________ involves establishing objectives and selecting appropriate strategies to achieve these objectives.
Planning
_____ is process by which actual performance of the organisation is compared against defined organisational plans.
Controlling
A ________ is a possible course of action that might enable an organisation to achieve its objectives.
strategy
Strategic information is mainly used by ______ management in an organisation.
senior
Productivity measurements are examples of ______ information
tactical
__________ information is required frequently by its main users
Operational
_____is a process by which senior management make medium-term, more detailed plans for the next year, for e.g. how the resources of the business should be employed
tactical planning
_____ involves making day to day operations. Front-line managers such as foremen have to ensure that specific tasks are planned.
operational planning
What is Information?
Information is data that has been processed in such a way as to be meaningful to the person who receives it.
_______ is the raw material for data processing
Data
True or false?
Data on its own is meaningless.
True
The benefits obtainable from the information must _____ the costs of acquiring it
exceed
Information should be _____because using incorrect information could cause serious and damaging consequences
accurate
Information must be relevant to the purpose for which a ______ wants it.
manager
Information should be accessible via the ________ ________ of communication and to the right people
appropriate channels
There is a possibility that management accounting information may ____ to meet the objective of assisting management in the decision-making process due to its failure to meet the requirements of good information
fail
Not all information produced by accounting system is ______ to the decisions made by management
relevant
______ is data collected especially for a specific purpose
Primary data
_____ is data which can take on any value
continuous data
Give examples of external sources of data. (2)
Government statistics & The Financial Times.
____________may provide information concerning detailed labour costs
payroll system
The ______is a global network allowing any computer with a telecommunications link to send and receive information to and from any other computer
internet
In which economic time does consumer demand increase?
Boom
If a company carries a high level of debt, it’s cash flow will be affected by what?
An increase in interest rates
__________ are identified with goods produced for resale.
Production costs
_________ are not directly associated with production of manufactured goods.
Non-production costs
Give examples of Production costs (3)
Direct material
Direct labour
Variable production overheads
Give examples of Non-production costs (3)
Administrative costs
Selling and distribution expenses
Finance costs
Indicate whether each event results in the incurrence of a production cost or a selling, distribution, administration or finance cost.
i. Paid wages to production workers
ii. Paid advertising
iii. Purchased cars for sales staff
iv. Used general office supplies
(i) production cost
(ii) selling
(iii) selling
(iv) administration
Indicate whether each event results in the incurrence of a production cost or a selling, distribution, administration or finance cost.
i. Used raw materials in the manufacturing process
ii. Paid wages to factory supervisors
iii. Paid loan interest
(i) production cost
(ii) overhead
(iii) finance
A manufacturing organisation incurs costs relating to the following:
(1) Commission payable to salespersons.
(2) Inspecting all products.
(3) Packing the products at the end of the manufacturing process prior to moving them to the warehouse.
Which of these costs are classified as production costs?
(2) Inspecting all products.
(3) Packing the products at the end of the manufacturing process prior to moving them to the warehouse.
_________include all costs involved in running the general administration department of an organisation
administrative costs
________ include all the costs that are incurred in order to finance an organisation, for e.g. loan interest
finance cost
The three major cost components of manufacturing a product are
direct materials
direct labour
factory overhead
________includes all cost of materials purchased for production raw materials and components
materials
Identify whether the following costs are direct or indirect materials, labour or expenses.
i. Wages of factory production workers
ii. Salaries of factory supervisors
iii. Rent of a factory
(i) dir labour
(ii) indir labour
(iii) indir expense
Identify whether the following costs are direct or indirect materials, labour or expenses.
i. Oil for lubricating machines
ii. Packing material
(i) indir material
(ii) dir material
Which one of the following should be classified as indirect labour?
- Assembly workers on a car production line
- Bricklayers in a house building company
- Machinists in a factory producing clothes
- Forklift truck drivers in the stores of an engineering company
Forklift truck drivers in the stores of an engineering company
In an organisation, manufacturing a number of different products in one large factory, the rent of that factory is an example of a direct expense when costing a product.
Is this statement true or false?
False
______ materials are materials which cannot be traced in the finished product, for example, oil for machines in the production line.
Indirect
_______costs not directly charged to production. Examples are rent, rates and insurance of a factory, depreciation, fuel, power maintenance of plant, machinery and buildings.
indirect expenses
Electricity bill is classified as
semi-variable cost
Raw material is classified as
variable cost
Rent of factory is classified as
fixed cost
Supervisors’ wages (more supervisors required as the number of employees increases) is classified as
stepped fixed costs
A semi-variable cost is one that, in the short term, remains the same over a given range of activity but beyond that increases and then remains constant at the higher level of activity.
Is this statement true or false?
False
Straight line depreciation of machinery is classified as
A fixed cost
A stepped fixed cost is only fixed within certain levels of activity.
The depreciation of a machine may be fixed if production remains below 1,000 units per month. If production exceeds 1,000 units, a second machine may be required, and the cost of depreciation (on two machines) would go up a step.
True or False?
True
A ____ _____ is any activity for which a separate measurement of cost is undertaken.
Cost object
_____ is a unit of product or service in relation to which costs are ascertained. E.g room, a course, one litre of paint
Cost Units
For which of the following is a profit centre manager responsible?
Costs and revenues
Which of the following is a characteristic of an investment centre?
- Managers can purchase capital assets
- Managers have control only over marketing
- Managers are accountable for revenues only
- Managers are accountable for costs only
Managers can purchase capital assets
A cost centre is
A production or service location, function, activity or item of equipment for which costs are accumulated
A cost center is a production or service location, function, activity or item of equipment whose costs are identified and recorded, e.g. manufacturing department, purchasing department and paint shop.
true or false?
true
Revenue center managers…..
will want information on markets and new products and they will look closely at pricing and the sales performance of competitors in addition to monitoring revenue figures.
The manager here will want the same information as the profit centre manager and in addition they will require quite detailed appraisals of possible investments and information regarding the results of investments already undertaken.
Investment Centre
The manager here will want information regarding both revenues and costs. They will be judged on the profit margin achieved by their division.
Profit Centre
When producing written reports, the management accountant needs to determine the type of document required and establish the user of the information.
true or false?
true
Last year, a company made the following sales in each of its four stores which it has in different areas of the country. Store 1 $30,000 Store 2 $25,000 Store 3 $70,000 Store 4 $75,000
Total $200,000
Using a pie chart to represent the proportion of sales which each store has made last year, what would be the angle of the section to represent the sales from store 3?
126°
70000 / 200000 X 360° = 126°
Identify the correct formula for calculating the segment angles in a pie chart
The segment value divided by the total value multiplied by 360
Which of these are types of bar chart?
i. Component bar chart
ii. Composite bar chart
iii. Percentage component bar chart
iv. Simple bar chart
i. Component bar chart
iii. Percentage component bar chart
iv. Simple bar chart
Which one of the following statements is true?
- The independent variable is shown on the y axis
- The dependent variable is shown on the y axis
- The x axis is the vertical axis
- The y axis is the horizontal axis
The dependent variable is shown on the y axis
What is the independent variable?
A fixed point of measurement not affected by another variable
Product B is made up as follows:
Material W: $2,000
Material X: $1,000
Material Y: $4,000
Material Z: $2,000
If the material proportions were displayed on a pie chart, how many degrees would Material Y represent?
160 degrees
4,000 / 9000 x 360 = 160 degrees
- Clarity of presentation of information can be further improved if data is presented in the form of charts or graphs.
- A bar chart is widely used method of illustrating quantitative data.
- both statements are true
- both statements are false
- statement 1 is false
- statement 2 is false
both statements are true
A __________________ is one where there is more than one bar for each subdivision of the chart.
For example, if the sales per product for each year are given then of each year there could be a separate bar for each product.
compound bar chart
A company’s sales in the last year in its three different markets were as follows:
$ Market 1 100,000 Market 2 150,000 Market 3 50,000 Total 300,000
In a pie chart representing the proportion of the sales made in each market what would be the angle of the section representing Market 3 (to the nearest whole degree)?
60 degrees
Total number of degrees = 360
Proportion of market 3 sales: (5,000/300,000) x 360 = 60 degrees
You have been asked to make a pie-chart from the following information that relates to costs incurred in different departments of the factory:
Dept A $560 Dept B $330 Dept C $215 Dept D $746 Dept E $662 Dept F $452
What is the angle in pie-chart representing Department D?
Round your answer to one decimal place.
Total cost = $560 + $330 + $215 + $746 + $662 + $452 = $2,965
Dept D = $746 / $2,965 x 360 degrees = 90.6 degrees
