Advance cost and management accounting essay
Discuss the various components of management accounting and relate them to the focus of this textbook. Two other very influential books, although they are not textbooks, were published in and There are two four-hour exams each consisting of multiple choice questions and two minute essay questions.
Companies in an individualistic system do not provide a comparable level of job security. Unit costs of a product or service are also needed for product pricing and product discontinuance decisions.
Management accounting essay conclusion
A cost or process measurement such as a quantity of input that is outside the acceptable range, is viewed as potentially out of control. After acquiring experience in their particular specialty, they become managers. If jobs are limited to a few simple repetitive tasks, employees can be laid-off, or fired and easily replaced when needed. The individualistic system is quite different. This hedonistic attitude can also be traced back to the neoclassical economists or marginalist who assumed that workers would attempt to maximize pleasure and minimize pain. However, other activities that are not related to production volume might also be important in analyzing cost behavior. The matching concept is pervasive in accrual accounting and requires that costs and benefits are matched or brought together on the income statement. Similar ideas can be found at the practice level in the works of Frederick W. When the inventory is sold, we say these costs have expired, i. The purpose of this book is to help you develop an understanding of the concepts, techniques and controversial issues associated with what most accountants refer to as cost and managerial accounting.
Generally, control refers to influence over an outcome and involves an evaluation to determine if the object to be controlled, such as a cost, or process measurement, is inside or outside an acceptable range, i. The purpose of this chapter is to introduce the concepts that provide a foundation for our excursion into the domain of cost and managerial accounting.
This indirect category includes a variety of costs that are discussed in more detail in subsequent chapters.
Some horizontal cost functions are presented in the top right panel of Exhibit to illustrate the idea. Relationship between Government and Business In the communitarian system, government works to support business and to promote cooperation between businesses and industry groups within the system.
Cost accounting tutorials pdf
However, other activities that are not related to production volume might also be important in analyzing cost behavior. Operational definitions contain sufficient clarity so that they cannot be misinterpreted. The source of this philosophy is easily traced to the classical school of economics founded by Adam Smith. But suppose we are talking about cleaning the instruments needed for brain surgery. Explain the difference between conceptual definitions and operational definitions. Thurow refers to this idea as "strategic conquest". However, this does not mean that fixed costs remain constant.
Step functions can take on many forms as illustrated in the lower right panel of Exhibit Because cost accounting involves determining the cost of something, such as a product, a service, an activity, a project, or some other cost object.
Conceptual definitions are those typically found in a dictionary and usually represent generalizations.
Cost and management accounting questions and answers
Internal auditors may examine, or audit, all of the organization's accounting and management systems. This idea translates into maximizing the utility obtained from consumption and minimizing the disutility associated with work. More descriptive discussions of the various types of cost behavior are provided in Chapter Management accounting is expanded in Exhibit to include cost accounting, cost management, activity management and investment management. However, since many American organizations have redesigned their systems to emphasize cooperation and teamwork and to de-emphasize competition between individuals and segments within an organization. The communitarian approach emphasizes continuously seeking to improve the system. In an individualistic environment, according to Deming, managers blame people for problems because they do not understand the system. For example, a single production supervisor who's salary normally represents a fixed cost might be adequate until production reaches a certain level, then a second supervisor would need to be hired. Although your initial perception of this course may be somewhat different, this is a very broad discipline with rich conceptual linkages to economics, finance, statistics, production management, management science, marketing and engineering. In addition, a family of K-statements e.
Of course, cooperation and teamwork provides the foundation of a communitarian organization.
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