Management Accounting Techniques

The purpose of management accounting is to:

• Provide financial information for decision-making

• Ensure compliance with tax laws

• Audit financial statements

• Manage company investments

The management accountant of ABC has produced a monthly report for managers. Some of the managers have complained that the report is unhelpful as it misses out some key figures and that they are not always familiar with the terminology used in the report. Which of the characteristics of good information are missing in this report?

• Accurate and relevant

• Complete and understandable

• Easy to use and accurate

• Understandable and authoritative

A cost unit is an individual unit of _______ or service for which costs can be separately ascertained.

• product

• service

• cost

• unit

A cost unit in the context of management accounting is:

• a measure of the resources consumed by a cost object.

• a unit of product or service for which costs are measured.

• a financial statement showing the company's performance.

• a method of allocating overhead costs.

Which of the following is an example of a composite cost unit?

• Tonne-miles for haulage companies

• Litres of paint for a paint manufacturer

• Specific customer order in a printing firm

• Cost per hour of chargeable time in an accountancy firm

Fill in the blank: Classification by element involves stating costs according to what the cost is, such as Material, Labour, and _______.

• Overhead

• Rent

• Utilities

• Insurance

Which of the following is a non-production cost?

• Raw materials

• Factory rent

• Stationery for the administration team

• Oil for lubricating production machinery

A variable cost is one that varies with a change in activity or output.

• True

• False

Fill in the blank: Total variable costs/activity level = ________.

• Total variable cost per unit

• Fixed cost per unit

• Total cost per unit

• Average cost per unit

An example of a stepped fixed cost could be ________.

• stepped fixed cost

• variable cost

• sunk cost

• marginal cost