Managerial accounting and cost accounting

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Discussion Board Chapter 14 Options Menu: Forum

“Managerial accounting is a field of accounting that provides economic information for all interested parties.” Do you agree? Explain

Sample answer-1 ( )

Yes, I do agree with the statement. All interested parties would be financial, managerial, and executive employees of the business. Managerial accounting is more about the costs associated with a product or service, or the bottom line. It can help provide information about where the company can reduce costs and run more efficiently. Managerial accounting is for the company itself to use as a tool, whereas finance accounting is more about presenting the company's financial records to both itself and outside parties.

Answer: Management Accounting is concered with the accounting information to managers within an organization, management accounting helps the management

In decision making system and provide best financial reporting the organization;s

Strategy.

Sample answer-2 (Carrie Stratton)

Managerial accounting is a field of accounting that provides economic information for all interested parties.” Do you agree? Explain: Yes I do agree with this statement because both managerial and financial accounting requires that economic events of a business be quantified and communicated to interested parties. Example: Determining unit cost is part of managerial accounting, and reporting cost of goods manufactured is a part of financial accounting. Another point that these two interest overlap is that internal users may be the primary user for managerial accounting reports but these reports are to be done as needed unlike financial accounting. In which, financial accountings primary user is external users but generally the reports are done quarterly and annually along with financial statements.

Discussion Board Chapter 15 Options Menu: Forum

Distinguish between the two types of cost accounting systems. (b) May a company use both types of cost accounting systems?

Sample answer-1 (Belal Alharbi )

The two types of principle types of cost accounting systems are: (1) job order cost system and

(2) process cost system. They are both different from each other as under a certain order a job order cost system is quite good when costs assigned for every job or for all the goods. In this situation every time each job or the batch of goods can also be identified separately. When it comes to job order cost system it measures costs for every individual job which is completed whereas process cost system, product-related costs are gathered and assigned for a specific set period of time. Every time job-order costing lends itself to a special kind of servicing but in case of process costing it is more suited for similar kind of products in manufacturing.

It depends on the situation to use which systems but a company can also use both kinds of systems. For example we can consider as in General Motors uses process costing for a standard model cars and in case of custom-made vehicles job order costing is used.

Sample answer-2 ()

Discussion Board Chapter 16 Options Menu: Forum

Contrast the primary focus of job order cost accounting and of process cost accounting

Sample answer-1 ( Belal Alharbi)

The primary focus of job cost accounting is the mass production of goods which are identical or at least similar in nature. Whereas process cost accounting focuses on the individual jobs.An example of products made under job order cost accounting is cold drinks or soft drinks where as in case of products made under process cost accounting the example is advertising materials. There is a difference between them, in job order cost system it utilizes one work at a time in process account whereas in case of process cost system it uses multiple work in process accounts. Both job order and a process cost system requires three cost elements which includes direct materials, direct labor and manufacturing overhead. The accumulation of costs is same in both the systems and the methods of assigning the costs varies differently.

Sample answer-2 ()

Answer: There are two types of cost accounting systems are process cost system and job order cost system.

This system of cost accounting provide separated record and information about the quantity of each particular products that passes through factory.

This accumulates the cost of each departments and Factory.

Job Order costing where firms manufacture customize goods to fill special orders from customers and many service also used this systems.

Discussion Board Chapter 17 Options Menu: Forum

What is generally true about overhead allocation to high-volume products versus low-volume products under a traditional costing system?

Sample answer-1 ( )

Sample answer-2 ()

Discussion Board Chapter 18 Options Menu: Forum

What is cost behavior analysis? Why is cost behavior analysis important to management?

Sample answer-1 (Belal Alharbi )

Cost behavior is associated with learning and is not required for external reporting under U.S. The costs which change in the level of activity are referred to as variable costs. The costs which are unaffected can be classified as the fixed costs. It is very important to understand cost behavior for management’s efforts when planning and controlling the organization’s costs. It is also necessary for calculating a company’sbreak-even point and for any other cost-volume-profit analysis.

Cost behavior is important to recognize the type and nature of costs. And also costs vary with production activity and remain fixed during a period of production in some activities Some the important aspects is to understand their behavior in a budgeting scenario.

An important aspect of cost and management accounting is to be able to recognize the semi variable costs with a variable element.

Answer: Cost Behaviour analysis is associated with learning how cost change when there is a change in an organizations activity called Variable cost. The cost that remain Unaffected in any level of activity called Fixed cost.

It is useful in calculating company’s Break even point and any other cost volume profit analysis.

Sample answer-2 ()

Discussion Board Chapter 19 Options Menu: Forum

What is meant by CVP analysis? Provide three examples of management decisions

that benefit from CVP analysis.

Sample answer-1 (Belal Alharbi )

Cost-Volume-Profit (CVP) analysis is a managerial accounting technique which is mainly concerned with the effect of sales volume and also product costs on operating profit of a business. It mainly deals with the selling price and profit price of the different products. It has some assumptions :

The costs can be categorized in fixed or variable ways. All the units produced are sold and total fixed costs are constant. CVP analysis provides the complete information toanswer for a specific kind of pragmatic questions.

It is a tool which can be used in many ways to better the business decisions. In decision making CVP analysis provides more detailed ways to access the course for the employees. CVP analysis is having an advantage where it cananswer specific pragmatic questions needed in business rectification. It is based on statistical models which can be broken down in probabilities that help in decision making process.

Sample answer-2 ()

Answer: Cost volume Profit is a method used in managerial economics and making cost volume profit is based upon determining break even point of cost and volume of goods. It can be helpful for Managers short term-Economic decision, and also for general education purpose.

It a statistical model which can break profits in an Organization that helps managers in decision making activities.

Discussion Board Chapter 20 Options Menu: Forum

Identify the two parts of stockholders’ equity in a corporation and indicate the purpose of each.

Sample answer-1 ( )

Sample answer-2 ()

Discussion Board Chapter 21 Options Menu: Forum

What is budgetary control?

The use of Budget answer-1 ( )

Sample answer-2 ()

Answer: The use of Budget to control a firm’s activities is known as Budgetary Control.

Budgetary control is a system of controlling costs which includes the preparation of budgets, coordinating the departments and establishing responsibilities, comparing actual performance with the budgeted and acted upon result to achieve maximum profitability.

Discussion Board Chapter 22 Options Menu: Forum

Explain the similarities and differences between standards and budgets. Contrast the accounting for standards and budgets.

Sample answer-1 ( )

Sample answer-2 ()

Answer: A budget is a plan and blue print of future management action. The term Budget is defined as financial/quantitative. Statement prepared prior to defined period for the purpose of attaining a given objective.

Standard is a carefully predetermined quantity target which can be achieved certain condition.

Discussion Board Chapter 23 Options Menu: Forum

What steps are frequently involved in management’s decision-making process?

Sample answer-1 ( )

Sample answer-2 ()

Answer: These are the following steps required to take decision in Management

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