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Management Accounting Essentials
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1
Question
What is the primary focus of management accounting?
Page 1
Answer
The process of measuring, analyzing, and reporting information to help managers make informed decisions.
2
Question
How does management accounting differ from financial accounting in terms of users?
Page 1
Answer
Management accounting is for internal users like managers, while financial accounting focuses on external users.
3
Question
What is the key role of cost accounting?
Page 1
Answer
It bridges financial accounting and management accounting by providing cost data for both.
4
Question
What is cost management primarily concerned with?
Page 1
Answer
Applying cost accounting information to increase a firm's profits by reducing costs and improving efficiency.
5
Question
What are the five steps in the accounting information process for decision-making?
Page 2
Answer
1. Identify the problem and uncertainties. 2. Obtain information. 3. Make decisions about response. 4. Implement the decision. 5. Evaluate performance and feedback.
6
Question
What are key management accounting functions?
Page 2
Answer
Budgeting, investigating, production planning, and performance evaluation.
7
Question
How does management accounting strategy help a company?
Page 2
Answer
It helps achieve objectives with limited resources by aligning with competitive advantages.
8
Question
What is the role of a sales manager?
Page 3
Answer
Directly commands the sales force to achieve sales goals.
9
Question
What does a staff accountant do?
Page 3
Answer
Advises line managers on management accounting matters.
10
Question
What is the controller's role in a company?
Page 3
Answer
Chief accounting officer, including financial accounting, internal audit, and management accounting.
11
Question
What ethical responsibilities do management accountants have?
Page 3
Answer
Competence, confidentiality, integrity, and credibility.
12
Question
What is key success factor analysis?
Page 3
Answer
Focuses on cost, quality, time, and flexibility to help manage global competition.
13
Question
What is a cost object?
Page 4
Answer
Anything for which a separate measurement of costs is desired.
14
Question
What is a cost assignment?
Page 4
Answer
A general term for the process of tracing costs to cost objects.
15
Question
What is a direct cost?
Page 4
Answer
A cost that can be traced conveniently to a cost object.
16
Question
What is an indirect cost?
Page 4
Answer
A cost that cannot be traced conveniently to a cost object and requires allocation.
17
Question
What is a product cost?
Page 4
Answer
A cost that is inventoried until sold, including direct materials, direct labor, and manufacturing overhead.
18
Question
What is a period cost?
Page 4
Answer
A cost that is expensed in the period incurred, such as selling and administrative costs.
19
Question
What is a prime cost?
Page 4
Answer
Sum of direct materials and direct labor costs.
20
Question
What is a conversion cost?
Page 4
Answer
Sum of direct labor and manufacturing overhead costs.
21
Question
What are direct manufacturing costs?
Page 5
Answer
Direct materials and direct manufacturing labor.
22
Question
What is indirect manufacturing labor?
Page 5
Answer
Labor costs of workers who support the production process, like maintenance.
23
Question
What is the formula for total manufacturing costs?
Page 5
Answer
Direct materials + direct manufacturing labor + manufacturing overhead.
24
Question
How do product costs differ from period costs in financial reporting?
Page 5
Answer
Product costs are inventoriable for manufacturing companies, while period costs are expensed immediately.
25
Question
What is a variable cost?
Page 6
Answer
A cost that changes in total with changes in activity level.
26
Question
What is a fixed cost?
Page 6
Answer
A cost that remains unchanged in total with changes in activity level.
27
Question
What is a mixed cost?
Page 6
Answer
A cost with both fixed and variable components.
28
Question
What is the relevant range for cost behavior?
Page 6
Answer
The range of activity where a cost relationship is valid.
29
Question
In a manufacturing company, how many inventory accounts are typically used?
Page 6
Answer
Three: raw materials, work in process, and finished goods.
30
Question
What is the flow of costs in manufacturing?
Page 6
Answer
Raw materials → Work in process → Cost of goods manufactured → Finished goods → Cost of goods sold.