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Questions and Answers

What is the primary purpose of planning in management accounting?

To analyze historical performance for external reports

To assess compliance with regulatory standards

To focus solely on past financial results

To quantify and interpret the effects of future transactions (correct)

Which of the following is an objective of evaluation in management accounting?

To prepare external financial statements

To create financial reports for shareholders

To judge the implications of historical events in relation to the planned actions (correct)

To ensure compliance with tax regulations

What role does control play in management accounting?

To monitor performance and apply corrective actions if necessary (correct)

To prepare consolidated financial statements

To determine the government's tax liabilities

To design investment strategies for external stakeholders

Why is the calculation of cost important in management accounting?

It helps in valuing inventories and controlling operations Signup and view all the answers

How does management accounting primarily differ from financial accounting?

Management accounting is tailored for internal users like managers Signup and view all the answers

What is NOT a purpose of valuing inventories in management accounting?

To provide data for regulatory compliance Signup and view all the answers

Which of the following users is NOT typically involved with management accounting?

Shareholders Signup and view all the answers

What information does management accounting provide for internal decision-making?

Cost data for product pricing and operational decisions Signup and view all the answers

What type of variable cost decreases as production increases and may behave in different proportional ways?

Recurrent costs Signup and view all the answers

What distinguishes semifixes or variable jumps from other variable costs?

They remain fixed until a specific production threshold is reached. Signup and view all the answers

Which of the following is NOT a characteristic of mixed or semi-variable costs?

They are entirely variable. Signup and view all the answers

Which costs can be assigned directly to a specific cost object without subjective distribution?

Direct costs Signup and view all the answers

What is the correct interpretation of degressive costs?

Costs that decrease as production increases but not in fixed intervals. Signup and view all the answers

What is a defining feature of costs classified as indirect?

Can be shared among multiple activities or products. Signup and view all the answers

What is an example of a mixed or semi-variable cost?

Electricity bills with a fixed and variable component. Signup and view all the answers

How are recurrent costs characterized in relation to production volume?

They decrease as production increases. Signup and view all the answers

What is the unit cost of producing 30 units if the fixed costs total €300 and the variable cost is €10 per unit?

€20 per unit Signup and view all the answers

In the case of manufacturing 50 units, what will be the total cost incurred?

€800 Signup and view all the answers

What is a key characteristic of the direct-cost model?

It only incorporates some production costs. Signup and view all the answers

What factor can make the allocation of fixed costs subjective?

The criterion used by the person in charge Signup and view all the answers

What formula is used to calculate the unit cost of production?

Total Costs / Total Units Produced Signup and view all the answers

Which of the following selected costs often leads to disagreements in management accounting?

Indirect costs attributed to ancillary services Signup and view all the answers

What is the unit cost when producing 50 units given the total cost of €800?

€16 per unit Signup and view all the answers

What aspect does the full cost model fail to address effectively?

Direct cost allocation to specific products Signup and view all the answers

What do historical inorganic models primarily focus on?

Real magnitudes of costs Signup and view all the answers

Which characteristic distinguishes predetermined organic models from historical organic models?

They utilize predicted magnitudes. Signup and view all the answers

What is a key advantage of predetermined organic models?

They allow for deviations analysis. Signup and view all the answers

Which of the following models is considered the most complete?

Predetermined organic models Signup and view all the answers

Which statement accurately describes the historical organic models?

They provide insights into cost centers. Signup and view all the answers

How do predetermined inorganic models allow for cost analysis?

By comparing predicted costs to actual costs. Signup and view all the answers

What limitation do historical inorganic models have?

They fail to account for cost center effects. Signup and view all the answers

In the context of management accounting, what do deviations represent?

The difference between predicted and real costs. Signup and view all the answers

What is the impact of excess capacity costs on a company's earnings?

They decrease earnings due to idle resources. Signup and view all the answers

What does hysteresis of costs refer to?

The irreversibility of certain costs when production fluctuates. Signup and view all the answers

Which of the following terms describes costs that behave as fixed after certain intervals in production?

Jump variables or semifixes. Signup and view all the answers

How can the distinction between costs of the activity and costs for excess capacity help businesses?

It helps alleviate the problem of cost hysteresis. Signup and view all the answers

Which of the following does NOT accurately describe a characteristic of hysteresis in costs?

Costs remain consistent regardless of production levels. Signup and view all the answers

What might lead to the emergence of hysteresis in production costs?

Increased need for fixed infrastructure and management. Signup and view all the answers

Which of the following best describes the consequence of having idle superstructure in a company?

A decrease in overall earnings. Signup and view all the answers

Why is it important for companies to understand the distinction between activity costs and excess capacity costs?

To assess the true competitiveness of their products. Signup and view all the answers

What is meant by costs for excess capacity in a production context?

Costs that arise from maintaining machines not fully utilized. Signup and view all the answers

Given a production volume of 100 uc or less, how is the cost of the second machine classified?

As a cost for excess capacity. Signup and view all the answers

How do costs for excess capacity impact the financial results of a company?

They do not impact the cost of the production process. Signup and view all the answers

Which statement correctly explains the relationship between activity costs and costs for excess capacity?

Only activity costs are accounted for in product costing. Signup and view all the answers

What element is not accounted for as part of the cost of the production process?

Costs incurred from machinery not in use. Signup and view all the answers

In the context of the example provided, what determines whether a cost is categorized as an activity cost or excess capacity?

The amount of production achieved. Signup and view all the answers

How are excess capacity costs treated in relation to the total result of the company?

They increase the overall expenses in financial statements. Signup and view all the answers

How should depreciation costs affect the activity cost classification when production exceeds capacities?

They should be fully included in the activity costs. Signup and view all the answers

Study Notes

Management Accounting: Basic Concepts

This document introduces Management Accounting, a discipline within the framework of economics and business administration.
It focuses on the economic-technical cycle of a company, as a system with interconnected subsystems: Financing, Investment, Production, and Disinvestment.

Circulation of Values in a Company

The "Scheme of the circulation of values" in a company, developed by Professor Schneider, is a useful tool for understanding how resources flow through the different stages.
This scheme involves six series of accounts: Capital, Money, Purchases, Manufacture, Store, and Sales. Each represents a subsystem of transactions within the company.

Definition of Management Accounting

Management Accounting, or Cost Accounting, is a subset of Management Accounting.
It's focused on providing information for internal decision-making within an organization.
It's distinct from Financial Accounting, which focuses on providing information to external stakeholders.

Objectives of Management Accounting

Planning: Quantify and interpret the effects of transactions in the future.
Evaluation: Assess historical events to guide future actions.
Control: Monitor and measure performance, correcting deviations from the planned course.

Concept of Cost

Cost is defined as the monetary value of goods and services used in a production process.
Costs can be categorized as fixed or variable, depending on their relationship to production volume.
Costs can also be categorized as direct or indirect, based on whether their association with a specific cost object (product or service) is direct or requires allocation.
Subactivity costs are associated with the excess capacity; they are unrelated to current production.

Models for Allocating Costs

Full Cost Models: Allocate all costs (variable and fixed), including those tied to inventories.
Direct Cost Models: Allocate only variable costs, disregarding fixed.
Production Costs: Categorizes costs by the production and sales cycles.

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