Topic 1 - The Nature of Management Accounting

Question 1

A systematic process by which organization’s higher-level manager influence the organization’s lower-level managers to implement organizational strategies.

Answer 1

Management control

Question 2

Includes a set of techniques, processes and practices designed to assist management in the formulation and implementation of an organization strategy.

Answer 2

Management accounting

Question 3

• Measures all resources used activities and processes (both direct and indirect costs)
• Not limited to manufacturing of goods

Answer 3

Full costs accounting

Question 4

• Can be directly traced to a good or service
• Ex. material and labor

Answer 4

Direct costs

Question 5

• Costs that cannot be directly traced to a good or service but that is necessary for production.
• Ex. rent, utilities, administration, insurance, depreciations

Answer 5

Indirect costs

Question 6

An organizational unit headed by a manager who is responsible for its operation, performance and budget.

Answer 6

Responsibility Centers

Question 7

Responsible for only controlling cost without generating revenue (ex. HR department)

Answer 7

Cost Center

Question 8

Focuses only on generating revenue but not on controlling cost (ex. Sales department)

Answer 8

Revenue Center

Question 9

Both responsible for controlling cost and generating revenue (ex. product line division)

Answer 9

Profit Center

Question 10

Historically based future estimates describing how costs will be different for two or more alternatives.

Answer 10

Differential costs (incremental costs)