Question

I. Define and provide examples or applications for each term.

____1. Management Accounting

____2. Cost

____3. Actual Cost

____4. Budget

____5. Direct Labor

____6. Cost drivers

____7. Manufacturing Costs

____8. Variances   

____9. Manufacturing Overhead                      

____10. Direct Materials       

Answer 1

1.MANAGEMENT ACCOUNTING: The process of preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions.with out these accounting management process is null and void because no one target is achived with out these process.

2. COST: An amount that has to be paid or given up in order to get something.
In business, cost is usually a monetary valuation of (1) effort, (2) material, (3) resources, (4) time and utilities consumed, (5) risks incurred, and (6) opportunity forgone in production and delivery of a good or service. All expenses are costs, but not all costs (such as those incurred in acquisition of an income-generating asset) are expenses
3.ACTUAL COST: Actual cost is the actual expenditure made to acquire an asset, which includes the supplier-invoiced expense, plus the costs to deliver, set up, and test the asset. This is the cost of an asset when it is initially recorded in the financial statements as a fixed asset.

4.BUDGET: An estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals.
One of the most important administrative tools, a budget serves also as a (1) plan of action for achieving quantified objectives, (2) standard for measuring performance, and (3) device for coping with foreseeable adverse situations.

DIRECT LABOUR: Employees or workers who are directly involved in the production of goods or services. Direct labor costs are assignable to a specific product, cost center, or work order.

COST DRIVERS: A cost driver is the unit of an activity that causes the change in activity's cost. cost driver is any factor which causes a change in the cost of an activity. — Chartered Institute of Management Accountants

MAUFACTURING COSTS: Manufacturing cost is the sum of costs of all resources consumed in the process of making a product. The manufacturing cost is classified into three categories: direct materials cost, direct laborcost and manufacturing overhead.

VARIANCES:In an accounting sense, a variance is the difference between an actual amount and a pre-determined standard amount or the amount budgeted. In a statistical sense, avariance is a measure of the amount of spread in a distribution. It is computed as the average squared deviation of each number from its mean.

MAUFACTURING OVERHEAD:Manufacturing overhead (also referred to as factory overhead, factory burden, and manufacturing support costs) refers to indirect factory-related costs that are incurred when a product is manufactured.

DIRECT MATERIALS:Direct materials are those materials and supplies that are consumed during the manufacture of a product, and which are directly identified with that product. Items designated as direct materials are usually listed in the bill of materials file for a product.