Eduardo Carrillo 8/27/15 Cost Accounting Chapter 1 & 2 Discussion Questions 1. Cost management can be described as controlling and planning the business’ money. It differs from management accounting because of three objectives that the management accounting has. They are costing services, products and other objects. Planning and control and finally decision making. 2. In financial accounting it focuses on producing for external users when the cost management focuses on internal users. 3. The factors that affect the cost management are competition, growth in the same industry as the company, and improvements in manufacturing technology. 4. A flexible manufacturing system is enterprise resource planning which is designed …show more content…
Line positions workers have a direct responsibility of objectives while the staff positions have an indirect position towards the company objectives. 7. I believe the controller should be in the same level as other top management staff because he/she is in charge of all the company’s budgeting and has a more detailed understanding in the financial position that the company stands in. 8. Planning is when the company prepares a future route that the company will take. Controlling is the follow up after planning. Here the company monitors the outcome that their plan has taken. Finally the feedback stage is when the company takes the information that was received from the previous steps and evaluates it. From there another decision is taken depending if it is a positive or negative result. 9. The role of cost management regarding continuous improvement depends on the performance. The company is always striving to increase sale, come up with innovating technology that allows them to get ahead of their competitors. The cost management team gives the information needed by the top management to make decisions. 10. The performance reports shows the sales and cost of goods sold for a certain period in the company. The controlling part of the company then monitors this kind of data and that’s when it determines if the company is going in the right …show more content…
I disagree because there are some companies that are willing to do the wrong thing in order to come out on top in terms on profits or sale. If it is beneficial enough then they might be tempted to ignore the right thing. 13. Yes because those people in the position of management have more power than others and they must be even more cautious when acting for a company’s future. 14. The three forms of accounting certification are CPA, CMA, and CIA. The best certification for a management accountant is the CMA because it is accepted globally and it requires the certificate holder to be up to date with everything related to management. 15. The two examinations that must be passed to obtain the certificate are the decision making and the financial planning, performance, and control. They must meet different qualifications than the accountants meet which puts them in a better positon of managing certain areas of a company. Chapter 2 1. An accounting information system can be described as a form of collecting information by analyzing, classifying, and managing data so it can be given to others. 2. The financial accounting system focuses on outputs for external users when cost accounting focuses on internal outputs to meet the company’s
Cost management plays a major role when maintaining profit margins. Management must be able to find in which areas of a business costs must be reduced and the consequences that such reductions have in the overall company. In some situations management must change the way the work is being done in order to decrease costs while in other cases changing one supplier for another might be enough, in both situations a tradeoff will occur and the consequences will impact the company as a whole.
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
The Cost Management Plan clearly defines how the costs on a project will be managed throughout the project’s lifecycle. It sets the format and standards by which the project costs are measured, reported and controlled. The Cost Management Plan:
This, in order to identify what are the true costs of each customer and each order, enables the company to fully understand its cost structure thereby providing the base for better business choices and higher profitability. These are very sensible goals indeed. Even though the company is profitable, implementing a new, activity-based cost accounting system will allow the company to improve its margins and become even more focused and competitive in the future. 2.2. What is the difference between a.... ...
Q1: Financial statements are an important tool to record and summarise company financial situation and it can provide lots of information to the users of the accounts. And financial statements usually include income statements, balance sheets, statements of retained earnings and cash flows. Comparability, relevance, reliability and understandability are the four main characteristics which lead to useful financial information. In general, there are two main users who are interested in accounting information, internal users and external users respectively. External users include investors, customers, suppliers, government, competitors, lenders, and community representatives while internal users include managers, employees and owners.
Regarding form, management accounting does not provide for any standard format of preparing management accounts.It follows any size as long as the information is well presented to internal users and management of an organization to enhance decision-making. On the other hand financial accounting prescribes a composition for preparing published financial statements and accounts following a standard size as guided by Generally Accepted Accounting Principles (GAAPs) and International Financial Reporting Standards (IFRS).In financial accounting, there are concepts which accountants must adhere to in preparing financial statements.The accountants are guided by uniform concepts and standards of reporting which is not the case in managerial
Cost Accounting: Its role and ethical considerations Introduction: Accounting is the process of identifying, measuring, and communicating economic information about an entity for the purpose of making decisions and informed judgements. The major areas of within the accounting are: Financial Accounting, Managerial Accounting/Cost Accounting and Auditing- Public Accounting Managerial accounting is concerned with the use of economic and financial information to plan and control the activities of an entity and to support the management in planning and decision-making process. Cost accounting is the subset of managerial accounting and it helps management in determination and accumulation of product, process or service cost. Role of Cost Accounting: Increased competition and uncertain business conditions have put significant pressure on corporate management to make informed business decisions and maximize their company?s financial performance. In response to this pressure, a range of management accounting tools and techniques has emerged.
There are two different branches of accounting which are managerial accounting and financial accounting. First the managerial accounting, it the department which issues reports for internal managers. These reports are used for planning, forecasting and decision making.
Effective control process in an organization would help in gathering information about the process and the employees, this can further help the management whilst taking important decisions in terms of establishing standards to meet standards, measuring the actual performance, as well as comparing performance with the standards. It can further help the companies in achieving their optimum goals so that they can take corrective actions as and when required. The process controls in place and guide and provide the company with the required regulations of the company’s activities. Which can lead to the performance of the company, hence it will also help the organization in terms of monitoring and responding.
Control activities are the policies and procedures the organization uses to ensure that necessary actions are taken to minimize risks associated with achieving its objectives. Controls have various objectives and may be applied at various organizational and functional levels.
Controlling is the fourth management function and its purpose is straightforward- to make sure that actual performance meets or surpasses objectives. It is well used for decision making and problem solving. Effective control depends on other management functions and it gives feedback to them. These functions are planning, organizing and leading. Planning sets directions and allocates resources. Organizing puts people and material resources together in working combinations. Leading motivates people to use these resources in the best way. Basically, the function of controlling is to make sure that the right things happen in a right time and in the right way.Control helps that overall directions of individuals and groups are consistent with short-range and long-range organizational plans. Also, it helps to ensure that objectives and accomplishments are coherent with one another throughout an organization. Moreover, it helps maintaining fulfillment with essential organizational rules and policies. Good example where we can see role of control is in helping to protect individual rights to become equivalent with employment opportunities at work. The control process practiced by managers includes four steps: 1) establish objectives and standards 2) measure actual performance 3) compare results with objectives and standards and 4) take actions if necessary1. The controlling process starts with establishing performance objectives and standards which means that the controlling process begins with planning. Performance objectives should be defined and associated with specific measurement standards for determining how well they are accomplished. Standards are the targets of performance. The next step of the control process would be measur...
Managerial accounting which is a synonym for management accounting refers to the provision of accounting information to the managers of a particular organization which they will in turn utilize in making informed decisions that touch on the business and thus allowing them to carry out their control and management duties effectively (Caplan, 2006). Management accounting is a preserve of chartered management accountants though some companies my use other types of accountants to measure and report information regarding the economic activities of those companies. According to the Chartered Institute of Management Accountant (CIMA), managerial accounting entails a process of identifying, measuring, accumulating, analyzing, preparing, interpreting and communicating information of accounting information by managers with the aim of assuring appropriate use of available resources and accountability.
If we look at the contribution of Accounting to Financial Economic Thought, the initial idea of an individual, a firm or an economy is obtained on the basis of Financial Accounting information provided. An in-depth understanding of the financial accounting information provided will guide the decisions towards an optimal resource allocation.
My interest in Accounting and Finance stems from wanting to understand how governments and businesses make their vital decisions to be profitable. Studying this degree, will allow me to gain an understanding of financial accounting, management accounting and taxation providing me with skills to analyse data and develop my decision making. Additionally being able to incorporate different aspects of business alongside the core modules; will give me more knowledge of the world of accounting and finance.
Yuki Liu Acc 476 Professor Trisha Bansi. Current issues in technology that affect accounting When the twenty-one century comes, humans enter a new period. There have been developments in science, and it all adds to the richness of human life. As time goes on, science and technology have made major changes to the way we live. Technology has provided many tools that increase efficiency in any business, including accounting.