- 20 Marks
IMAC – NOV 2020 – L1 – Q3 – Cost and Cost Behaviour
Explain various cost terms in management accounting; identify characteristics of services.
Question
a) Cost is a generic term used by accountants to mean the expenses that are incurred in the production of goods and the delivery of services. The nature of cost is, however, well understood by a preceding adjective.
Required:
Explain the difference between the following cost terms as used in Management Accounting:
i) Direct and Indirect cost. (3 marks)
ii) Fixed and Variable cost. (3 marks)
iii) Controllable and Uncontrollable cost. (3 marks)
iv) Full and Marginal cost. (3 marks)
v) Production and Non-Production cost. (3 marks)
b) Costs can be established for services and operations in the same way as for physical goods even though services are different from physical goods.
Required:
Identify and explain TWO (2) characteristics of services. (5 marks)
Find Related Questions by Tags, levels, etc.
- Tags: Cost Classification, Management Accounting, Service Characteristics
- Level: Level 1
- Topic: Cost and Cost Behaviour
- Series: NOV 2020