What are the economic and technological changes many organizations, especially in the manufacturing sector, have faced in their business environment affected by?
They are affected by the product structure, manufacturing methods and also customer demands.
What is cost accounting concerned with?
Cost accounting is concerned with cost accumulation for inventory valuation to meet the requirements of external reporting and internal profit measurement.
What is cost accounting?
Cost accounting can be defined as a system in which financial data regarding business transactions are collected, classified, recorded, evaluated and reported for the following three purposes:
• To find the cost of product or service,
• Planning and controlling activities,
• Decision-making process.
How is effective planning made easier?
Effective planning is made easier by the following:
Clearly defined objectives of the manufacturing operation and a production plan that will aid and lead the company in reaching its objectives.
How is effective control achieved?
Effective control achieved by periodically measuring and comparing results, assigning responsibility and taking necessary corrective action.
What is a cost driver?
A cost driver is any factor that has the effect of changing the amount of total cost.
What is cost accumulation?
Cost accumulation is the collection of cost data in some organized way by means of an accounting system.
What is cost assignment?
Cost assignment is a general term that includes both (1) tracing accumulated costs that have a direct relationship to a cost object and (2) allocating accumulated costs that have an indirect relationship to a cost object.
What is a direct cost?
A direct cost is a price that can be completely assigned to the production of specific goods or services.
What are the manufacturing overhead costs?
The manufacturing overhead costs consist of a combination of many different cost elements. All costs related to production other than direct raw materials and direct labor are under this heading. Manufacturing overhead cost includes items such as indirect raw materials, indirect labor, depreciation expenses of fixed assets used in production, insurance, tax and rent expenses of fixed assets used in production, energy and fuel costs used in production and service expenses.
What is prime cost?
Direct labor cost combined with the direct material cost is called prime cost.
What is cost behavior?
Cost behavior is defined as how a particular cost element may change or behave in accordance with the changes in the volume of business activity.
What is semi fixed cost?
This cost can be defined as a cost which shows the characteristics of fixed costs initially and it jumps to a higher point when the quantity increases and shows against the characteristics of fixed cost until production amount changes.
What is semi-variable cost?
This cost can be defined as a cost that includes both fixed and variable cost.
What is a cost function?
A cost function is a mathematical formula used to chart how production costs will change at different production levels.
What are the inventory items in manufacturing organizations?
1. Raw material and supplies inventory,
2. Work-in-process inventory,
3. Finished goods inventory.
What are the key qualities of management accounting information system?
Relevance, Reliability, Comparability and Understandability.
What are the stages of the management accounting information system?
Information identification,
Information recording,
Information analysis,
Information reporting.
Who are the users of accounting information?
• Internal users within the organization,
• External users such as shareholders, creditors, and regulatory agencies, outside the organization.
What are the main differences between managerial accounting and financial accounting about?
Legal requirements,
Focus on individual parts or segments of the business,
Generally accepted accounting principles,
Time dimension.