Flashcards on Managerial Accounting and Cost Control
Managerial Accounting & Cost Control Explained
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Managerial Accounting
64 cards
Card 1
Question: What is operation costing and when is it used?
Answer: A hybrid costing system combining job-order and process costing for batch production where products are similar but differ (e.g., colours/sizes). Mate
Card 2
Question: How are materials, labour, and overheads tracked in operation costing?
Answer: Materials are tracked by batch (like job-order costing). Labour and overheads are tracked by department/operation (like process costing).
Card 3
Question: Give an example that illustrates operation costing.
Answer: Shoe production: same cutting process/equipment for a style done repetitively, but with different colours and sizes—some costs are identical across un
Card 4
Question: What does the master budget represent?
Answer: A financial plan composed of multiple interrelated budgets that lay out the company’s goals and feed into the cash budget, budgeted income statement,
Card 5
Question: What is the starting point of the master budget and what budgets does it drive?
Answer: It starts with the sales budget, which drives the production budget and budgets for materials, labour, and overheads; other budgets (ending inventory,
Card 6
Question: Define a budget in simple terms and its main purposes.
Answer: A budget is a financial plan used to set goals and later compare actual results. Purposes: planning (set goals), control (provide feedback and ensure
Card 7
Question: What is responsibility accounting (RA)?
Answer: An accounting approach where specific managers are made responsible for the line items (profits/costs) they can control; they should learn from result
Card 8
Question: Why must someone be assigned responsibility for each cost in responsibility accounting?
Answer: Because without an accountable manager, costs can get out of control; assigning responsibility ensures oversight and promotes corrective action.
Card 9
Question: What is a typical budget period for an operating budget and what is a continuous/perpetual budget?
Answer: Operating budget: usually one year (divided into quarters or months). Continuous/perpetual budget: a rolling 12-month budget that adds a month or quar
Card 10
Question: What is a self-imposed (participative) budget and what are its advantages and limitations?
Answer: A budget created with participation from all managers rather than imposed from the top. Advantages: all views considered, often more accurate, higher