Week 1 Flashcards
Definition of efficiency for MNTM?
Measuring outputs, focuses managers on achieving the objective with the least possible consumption of resources
What are some of the things management accounting covers?
An information system that produces the information required by managers to manage resources and to create value
Such as - costing system, budgeting system, performance management system, analysis of financial and non-financial resources
Definition of effectiveness for MNTM?
Measuring outcomes, focuses managers on the successful achievement of an objective
Outcome should not be confused as output
Outcome is defined as - the results or impact on the community or the environment that the government intends to achieve.
Output is defined as - the actual deliverables agencies produce to generate the desired outcomes specified by the government
What is the objective of management accounting (and standard business)?
Increase customer and shareholder value
How is management accounting and financial accounting different?
Management accounting is internally focused, no mandatory rules, financial and non-financial information, emphasis on the future, multidisciplinary with internal evaluation
Why control costs?
Involves putting together mechanisms to ensure that operations proceed according to plan and objectives achieved
Provides the information to control by comparing actual performance with plans, budgets and targets
Control systems and procedures provide regular information to assist control
What’s an expense?
A cost used up in the generation of revenue
What is level of activity?
The level of work performed in an organisation
What is a cost driver?
A factor or activity that causes a cost to be incurred
What are cost objects?
Cost objects are the times for which management wants a separate measure of costs for things like products, contracts, departments
What’s the difference between controllable and uncontrollable cost?
A controllable cost can be easily controlled by a manager
What is the value chain?
A set of linked processes or activities that begins with acquiring resources and ends with providing and supporting products and services that in total add customer value
What are upstream, production and downstream costs?
Upstream - research and development, design and supply costs
Production - resources and manufacturing costs
Downstream - marketing, customer service, distribution
How are manufacturing costs sorted
direct material, direct and manufacturing overhead
