Topic: Scope of Management Accounting

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FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

Question

Which of the following is NOT a purpose of the Conceptual Framework for Financial Reporting?
A. To assist national standard-setting bodies in developing national standards.
B. To assist preparers of financial statements in applying IFRSs and in dealing with topics that have yet to form the subject of an IFRS.
C. To assist auditors in forming an opinion on whether financial statements comply with IFRS.
D. To assist users of financial statements in interpreting the information contained in financial statements prepared in compliance with IFRS.
E. To define standards for measurement or disclosure.

Answer

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Tags: Accounting Standards, Conceptual Framework, IFRS
Level: Level 1

Topic: Scope of Management Accounting
Series: MAY 2018

IMAC – NOV 2023 – L1 – Q3 – Scope of Management Accounting

Discuss changes in the business environment affecting management accounting, differences between financial and management accounting, and the benefits of a cost and management accounting system.

Question

a) Management accounting can be described as the process of supplying the managers and employees in an organization with relevant information, both financial and non-financial, for making decisions, allocating resources, monitoring, evaluating, and rewarding performance.

Required:
In relation to the description of management accounting provided above:
State THREE (3) important changes that have taken place in the business environment that have influenced management accounting practice. (3 marks)

b) Financial Accounting and Management Accounting share important similarities since both are based on financial information and other quantitative information about business operations.

Required:
Identify FOUR (4) differences between financial accounting and management accounting. (4 marks)

c) Mr. Osei Nyarko, an engineer by training, established Kotmat Ltd three years ago with five employees. His only source of information concerning the performance of Kotmat Ltd has been the half-yearly financial statements, which he receives ten weeks after the end of each half-year. A proposal has been submitted to Mr. Osei Nyarko to install a cost and management accounting system.

Required:
i) Identify FOUR (4) benefits Mr. Nyarko will derive from installing a cost and management accounting system. (4 marks)
ii) Enumerate FOUR (4) types of information which could be obtained from the cost and management accounting system that cannot be obtained from the current system. (4 marks)

**d) State and explain TWO (2) useful pieces of information generated by marginal and absorption costing systems. (5 marks)

Answer

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Tags: Business Environment, Cost and Management Accounting System, Financial Accounting, Management Accounting
Level: Level 1

Topic: Scope of Management Accounting
Series: NOV 2023

IMAC – MAR 2023 – L1 – Q3 – Marginal Costing and Absorption Costing | Scope of Management Accounting

Explain qualities of management accounting information, and differences between marginal and absorption costing.

Question

a) Management accounting systems obtain information from both internal and external sources. Cost accounting system is one major source of management accounting information, and such information is only useful to managers if it possesses certain qualities.

Required:
In reference to the statement above, explain FIVE (5) qualities of management accounting information.
(10 marks)

b) Explain the following briefly:
i) Cost center (2.5 marks)
ii) Profit center (2.5 marks)

c) Explain TWO (2) differences between a marginal costing system and an absorption costing system.
(5 marks)

Answer

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Tags: Absorption Costing, Cost Center, Management Information, Marginal Costing, Profit Center
Level: Level 1

Topic: Marginal Costing and Absorption Costing, Scope of Management Accounting
Series: MAR 2023

IMAC – DEC 2022 – L1 – Q3 – Scope of Management Accounting | Standard Costing and Variance Analysis

Explanation of responsibility accounting classifications, reasons for full costing, and calculation of material, labour, and overhead variances.

Question

a) Responsibility Accounting is a system of accounting in which costs are identified with persons who are primarily responsible for making decisions about the costs in question. Responsibility Accounting classifies cost under two main headings.

Required:
Explain the TWO (2) classifications of cost under Responsibility Accounting. (2 marks)

b) Full costing is an accounting method used to determine the complete end-to-end cost of producing products or services. Accountants use the term full cost to mean more than a product’s manufacturing or production costs (including fixed manufacturing overhead).

Required:
Explain FOUR (4) reasons full cost of a product or service may be calculated. (8 marks)

c) Afram Ltd has just introduced a standard marginal costing system to assist in the planning and control of the production activities for its single product, Amino. The system became operational on 1 January 2022. The Functional Director responsible for cost and management accounting had a discussion with the Production Manager, and both have agreed on the following standard cost information to manufacture one unit of product, Amino.

Budgeted cost:

Direct materials: 4kg @ GH¢1.75 per kg
Direct labour: 2 hours @ GH¢10 per hour
Variable overhead: 2 hours @ GH¢8.25 per hour.

Actual Results:
The actual results for January 2022 are as follows:

Sales: 22,000 units yielding a total revenue of GH¢1,276,000
Production: 23,000 units
Direct Materials: 90,000 kgs at a cost of GH¢162,000
Direct labour: 48,000 hours at a cost of GH¢576,000
Variable overhead: GH¢350,000

The budgeted level of production and sales activity has been agreed with both production managers and sales staff at 24,000 units per month.

Required:
Calculate the following variances:
i) Direct Material Price
ii) Direct Material Usage
iii) Direct Labour Rate
iv) Direct Labour Efficiency
v) Variable Overhead Efficiency (10 marks)

Answer

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Tags: Full Costing, Labour Variance, Material Variance, Overhead Variance, Responsibility Accounting, Variances
Level: Level 1

Topic: Scope of Management Accounting, Standard Costing and Variance Analysis
Series: DEC 2022

IMAC – Aug 2022 – L1 – Q3 – Scope of Management Accounting

Discuss the objectives and qualities of management accounting, differentiate operational control from cost control, and explain specific order costing characteristics.

Question

a) Management Accounting is that branch of accounting known for management decision-making. It is a more intimate merger of the two older professions of management and accounting, wherein the information needs of the manager determine the accounting means for their satisfaction.

In Management Accounting, managers use accounting information in decision-making and to assist in the management and performance of their control functions. Management accounting information should comply with certain qualities and characteristics to be useful in planning, control, and decision-making.

Required:
i) Identify THREE (3) objectives of Management Accounting. (6 marks)
ii) Explain FIVE (5) qualities of management accounting information. (5 marks)

b) All deployed cost-accounting controls and processes should bring to focus opportunities for improvement and engender decision-makers’ trust in results. Operational control and cost control management approaches are needed to add insight into where and how cost improvements can be implemented.

Required:
Distinguish between operational control and cost control. (4 marks)

c) Specific order costing methods are appropriate for business organizations that are involved in the construction, manufacturing, or assembling of products to individual customers’ specifications.

Required:
State THREE (3) characteristics of Specific Order Costing. (5 marks)

Answer

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Tags: Cost Control, Information Qualities, Management Accounting, Objectives, Operational Control, Specific Order Costing
Level: Level 1

Topic: Scope of Management Accounting
Series: AUG 2022

IMAC – NOV 2019 – L1 – Q3 – Scope of Management Accounting

Identify features of operational information, features of a control system, and features of specific order costing.

Question

The role of Management Accounting is to assist managers at all levels of management (Strategic, Tactical, and Operational) of an organization in decision-making.

Required:
i) With examples from a manufacturing company, identify FIVE (5) features of information that is provided at the operational level of management. (10 marks)

ii) State TWO (2) features of a control system that is used at the tactical level of management in a commercial entity. (5 marks)

b) State and explain FIVE (5) features of specific order costing methods used in cost ascertainment. (5 marks)

Answer

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Tags: Control Systems, Management Information, Specific Order Costing
Level: Level 1

Topic: Scope of Management Accounting

FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

Question

Answer

Find Related Questions by Tags, levels, etc.

Tags: Accounting Standards, Conceptual Framework, IFRS
Level: Level 1

Topic: Scope of Management Accounting
Series: MAY 2018

IMAC – NOV 2023 – L1 – Q3 – Scope of Management Accounting

Discuss changes in the business environment affecting management accounting, differences between financial and management accounting, and the benefits of a cost and management accounting system.

Question

b) Financial Accounting and Management Accounting share important similarities since both are based on financial information and other quantitative information about business operations.

Required:
Identify FOUR (4) differences between financial accounting and management accounting. (4 marks)

**d) State and explain TWO (2) useful pieces of information generated by marginal and absorption costing systems. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Business Environment, Cost and Management Accounting System, Financial Accounting, Management Accounting
Level: Level 1

Topic: Scope of Management Accounting
Series: NOV 2023

IMAC – MAR 2023 – L1 – Q3 – Marginal Costing and Absorption Costing | Scope of Management Accounting

Explain qualities of management accounting information, and differences between marginal and absorption costing.

Question

Required:
In reference to the statement above, explain FIVE (5) qualities of management accounting information.
(10 marks)

b) Explain the following briefly:
i) Cost center (2.5 marks)
ii) Profit center (2.5 marks)

c) Explain TWO (2) differences between a marginal costing system and an absorption costing system.
(5 marks)

Answer

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Tags: Absorption Costing, Cost Center, Management Information, Marginal Costing, Profit Center
Level: Level 1

Topic: Marginal Costing and Absorption Costing, Scope of Management Accounting
Series: MAR 2023

IMAC – DEC 2022 – L1 – Q3 – Scope of Management Accounting | Standard Costing and Variance Analysis

Explanation of responsibility accounting classifications, reasons for full costing, and calculation of material, labour, and overhead variances.

Question

Required:
Explain the TWO (2) classifications of cost under Responsibility Accounting. (2 marks)

Required:
Explain FOUR (4) reasons full cost of a product or service may be calculated. (8 marks)

Budgeted cost:

Direct materials: 4kg @ GH¢1.75 per kg
Direct labour: 2 hours @ GH¢10 per hour
Variable overhead: 2 hours @ GH¢8.25 per hour.

Actual Results:
The actual results for January 2022 are as follows:

Sales: 22,000 units yielding a total revenue of GH¢1,276,000
Production: 23,000 units
Direct Materials: 90,000 kgs at a cost of GH¢162,000
Direct labour: 48,000 hours at a cost of GH¢576,000
Variable overhead: GH¢350,000

The budgeted level of production and sales activity has been agreed with both production managers and sales staff at 24,000 units per month.

Required:
Calculate the following variances:
i) Direct Material Price
ii) Direct Material Usage
iii) Direct Labour Rate
iv) Direct Labour Efficiency
v) Variable Overhead Efficiency (10 marks)

Answer

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Tags: Full Costing, Labour Variance, Material Variance, Overhead Variance, Responsibility Accounting, Variances
Level: Level 1

Topic: Scope of Management Accounting, Standard Costing and Variance Analysis
Series: DEC 2022

IMAC – Aug 2022 – L1 – Q3 – Scope of Management Accounting

Discuss the objectives and qualities of management accounting, differentiate operational control from cost control, and explain specific order costing characteristics.

Question

Required:
i) Identify THREE (3) objectives of Management Accounting. (6 marks)
ii) Explain FIVE (5) qualities of management accounting information. (5 marks)

Required:
Distinguish between operational control and cost control. (4 marks)

c) Specific order costing methods are appropriate for business organizations that are involved in the construction, manufacturing, or assembling of products to individual customers’ specifications.

Required:
State THREE (3) characteristics of Specific Order Costing. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Cost Control, Information Qualities, Management Accounting, Objectives, Operational Control, Specific Order Costing
Level: Level 1

Topic: Scope of Management Accounting
Series: AUG 2022

IMAC – NOV 2019 – L1 – Q3 – Scope of Management Accounting

Identify features of operational information, features of a control system, and features of specific order costing.

Question

The role of Management Accounting is to assist managers at all levels of management (Strategic, Tactical, and Operational) of an organization in decision-making.

Required:
i) With examples from a manufacturing company, identify FIVE (5) features of information that is provided at the operational level of management. (10 marks)

ii) State TWO (2) features of a control system that is used at the tactical level of management in a commercial entity. (5 marks)

b) State and explain FIVE (5) features of specific order costing methods used in cost ascertainment. (5 marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Control Systems, Management Information, Specific Order Costing
Level: Level 1

Topic: Scope of Management Accounting

Topic: Scope of Management Accounting

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FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

IMAC – NOV 2023 – L1 – Q3 – Scope of Management Accounting

Discuss changes in the business environment affecting management accounting, differences between financial and management accounting, and the benefits of a cost and management accounting system.

IMAC – MAR 2023 – L1 – Q3 – Marginal Costing and Absorption Costing | Scope of Management Accounting

Explain qualities of management accounting information, and differences between marginal and absorption costing.

IMAC – DEC 2022 – L1 – Q3 – Scope of Management Accounting | Standard Costing and Variance Analysis

Explanation of responsibility accounting classifications, reasons for full costing, and calculation of material, labour, and overhead variances.

IMAC – Aug 2022 – L1 – Q3 – Scope of Management Accounting

Discuss the objectives and qualities of management accounting, differentiate operational control from cost control, and explain specific order costing characteristics.

IMAC – NOV 2019 – L1 – Q3 – Scope of Management Accounting

Identify features of operational information, features of a control system, and features of specific order costing.

FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

IMAC – NOV 2023 – L1 – Q3 – Scope of Management Accounting

Discuss changes in the business environment affecting management accounting, differences between financial and management accounting, and the benefits of a cost and management accounting system.

IMAC – MAR 2023 – L1 – Q3 – Marginal Costing and Absorption Costing | Scope of Management Accounting

Explain qualities of management accounting information, and differences between marginal and absorption costing.

IMAC – DEC 2022 – L1 – Q3 – Scope of Management Accounting | Standard Costing and Variance Analysis

Explanation of responsibility accounting classifications, reasons for full costing, and calculation of material, labour, and overhead variances.

IMAC – Aug 2022 – L1 – Q3 – Scope of Management Accounting

Discuss the objectives and qualities of management accounting, differentiate operational control from cost control, and explain specific order costing characteristics.

IMAC – NOV 2019 – L1 – Q3 – Scope of Management Accounting

Identify features of operational information, features of a control system, and features of specific order costing.

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Topic: Scope of Management Accounting

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FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

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IMAC – NOV 2023 – L1 – Q3 – Scope of Management Accounting

Discuss changes in the business environment affecting management accounting, differences between financial and management accounting, and the benefits of a cost and management accounting system.

You're reporting an error for "IMAC – NOV 2023 – L1 – Q3 – Scope of Management Accounting"

IMAC – MAR 2023 – L1 – Q3 – Marginal Costing and Absorption Costing | Scope of Management Accounting

Explain qualities of management accounting information, and differences between marginal and absorption costing.

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IMAC – DEC 2022 – L1 – Q3 – Scope of Management Accounting | Standard Costing and Variance Analysis

Explanation of responsibility accounting classifications, reasons for full costing, and calculation of material, labour, and overhead variances.

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IMAC – Aug 2022 – L1 – Q3 – Scope of Management Accounting

Discuss the objectives and qualities of management accounting, differentiate operational control from cost control, and explain specific order costing characteristics.

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IMAC – NOV 2019 – L1 – Q3 – Scope of Management Accounting

Identify features of operational information, features of a control system, and features of specific order costing.

You're reporting an error for "IMAC – NOV 2019 – L1 – Q3 – Scope of Management Accounting"

FA – May 2018 – L1 – SA – Q1 – Scope and Purpose of Accounting

Identifies the purpose of the Conceptual Framework for Financial Reporting.

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IMAC – NOV 2023 – L1 – Q3 – Scope of Management Accounting

Discuss changes in the business environment affecting management accounting, differences between financial and management accounting, and the benefits of a cost and management accounting system.

You're reporting an error for "IMAC – NOV 2023 – L1 – Q3 – Scope of Management Accounting"

IMAC – MAR 2023 – L1 – Q3 – Marginal Costing and Absorption Costing | Scope of Management Accounting

Explain qualities of management accounting information, and differences between marginal and absorption costing.

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IMAC – DEC 2022 – L1 – Q3 – Scope of Management Accounting | Standard Costing and Variance Analysis

Explanation of responsibility accounting classifications, reasons for full costing, and calculation of material, labour, and overhead variances.

You're reporting an error for "IMAC – DEC 2022 – L1 – Q3 – Scope of Management Accounting | Standard Costing and Variance Analysis"

IMAC – Aug 2022 – L1 – Q3 – Scope of Management Accounting

Discuss the objectives and qualities of management accounting, differentiate operational control from cost control, and explain specific order costing characteristics.

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IMAC – NOV 2019 – L1 – Q3 – Scope of Management Accounting

Identify features of operational information, features of a control system, and features of specific order costing.

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