Management Information Flashcards
(89 cards)
What is the cost accountant tasked with?
Providing;
- the cost of goods or services
- the cost of operating a department
- revenues
Cost accounting is concerned with providing information to assist what?
- establishing inventory valuations, profits or losses and balance sheet items
- planning
- control
- decision making
Financial accounting vs management accounting
F-> external, must comply with regulations, created annually, focus on company as a whole, historic over past year, accurate and audited
M-> internal, no rules or regulations, created when needed, focus on specific area, past and forward looking, flexible and timely can be approximate
Production department vs non-production department
Production department are actively involved in the production, non-production departments provides a service or back-up to the production departments
Cost objects
Any activity for which a separate measurement of cost is desired e.g. the cost of a product, the cost of a service, the cost of operating a department
Cost unit
A unit of product or service to which costs can be related e.g. patient in hospital, Barrera in brewing industry, room in hotel
Composite cost units
Two part cost units
Used often in service organisations and can provide a more useful measure
Direct costs
Costs directly attributable or identified with a cost object
Indirect costs
Costs that are derived from overheads and aren’t directly linked to making products or delivering services
Prime cost
Is the total direct cost
Direct material cost+ direct labour cost+ direct expenses
Fixed cost
A cost that is not affected by changes in the level of activity e.g. rent, salary
They are fixed in total costs but variable in unit costs ( decreases as volume increases (economies of scale))
Variable cost
Cost that is affected as the level of activity changes e.g. raw materials and direct labour
They are variable in total cost but fixed in unit cost
Semi-variable cost
Costs that include a mixture of fixed and variable costs e.g. electricity bills with a standing charge and commission on sales generated of sales personable who get a basic salary
Relevant range
The range of activity levels within which assumed assumptions about variable and fixed costs are valid
Responsibility accounting
A type of management accounting in which a company’s management, budgeting, and internal accounting are all held accountable
Responsibility centre
An organisational unit headed by a manager, who is responsible for its activities and results
Controllable cost
Costs that can be influenced or regulated by the manager
Uncontrollable cost
An expense over which a person has no direct control
ICAEW fundamental principles
- integrity
- objectivity
- professional competence and due care
- confidentiality
- professional behaviour
Planning decision making and control process
Set objectives-> identify alternatives-> make decision-> implement decision-> compare actual results with plans-> revise objectives or take control action
Strategic planning
Long term, setting the broad objectives in the long term e.g. achieving a return on an investment. It is the responsibility of top management
Tactical planning
Short term, operational planning for the running dat-to-day operations of the business. It is the responsibility of the middle and low level management
Production costs
Those identified with goods produced for resale
Non-production costs
Costs deducted as expenses such as admin, selling, distribution and finance
