How does management accounting differ from financial accounting

1.1 How does management accounting differ from financial accounting?

Financial accounting measure and record business transactions, and management accounting measure, analyze and report financial information.

1.4 Describe the business functions in the value chain?

Research and development: creates new products.

Design of products, services, or process: planning how to build faster products.

Production: acquiring, coordinating, and assembling.

Marketing: promoting and selling products

Distribution: delivering the product.

Customer services: proving customer after-sale support.

1.5 Explain the term “supply chain” and its importance to cost management?

Supply chain describes the flow of goods, services, and information from the initial sources of materials and services to the delivery of products. The importance of the supply chain is how good you can sell your product to increase sales.

2.1 Define cost object and give three examples:

A cost object is often a product or department for which costs are accumulated or measured. Example: goods, services, products.

2.2 Define direct cost and indirect costs.

Direct costs can be traced directly to a cost object such as a product or a department. A cost or expense that is not directly traceable to a department, product, activity, customer, etc.

2.4 Name three factors that will affect the classification of a cost as direct or indirect.

The materiality of the cost in question, available information-gathering technology, design of operations

2.5 Define variable cost and fixed cost. Three examples.

A variable cost changes in total in proportion to changes in the related level of total activity or volume. An example is a sales commission that is a percentage of each sales revenue dollar. A fixed cost remains unchanged in total for a given time period, despite wide changes in the related level of total activity or volume. Example is the leasing cost of a machine that is unchanged for a given time period regardless of the number of units of product produced on the machine.

2.6 What is a cost driver? 1 example.

A cost driver is a variable, such as the level of activity or volume that causally affects total costs over a given time span. Example, the number of vehicles assembled is a driver of the costs of steering wheels on a motor-vehicle assembly line

2.7 What is the relevant range? What role does the relevant-range concept play in explaining how costs behave?

The relevant range is the band of normal activity level or volume in which there is a specific relationship between the level of activity or volume and the cost in question. Costs are described as variable or fixed with respect to a particular relevant range.

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