THE ACCOUNTANTS ROLE IN THE ORGANIZATION
ANSWERS TO QUESTIONS ON TEXT PAGES 19-20.
Management accounting measures, analyzes and reports financial and nonfinancial
information that helps managers make decisions to fulfill the goals of an orga
FLEXIBLE BUDGETS, DIRECT-COST VARIANCES,
AND MANAGEMENT CONTROL
(15 min.) Flexible budget.
The existing performance report is a Level 1 analysis, based on a static budget. It makes no
adjustment for changes in output levels. The budgeted ou
ACTIVITY-BASED COSTING AND ACTIVITY-BASED MANAGEMENT
Broad averaging (or peanut-butter costing) describes a costing approach that uses broad
averages for assigning (or spreading, as in spreading peanut butter) the cost of resources
AN INTRODUCTION TO COST TERMS AND PURPOSES
(15 min.) Computing and interpreting manufacturing unit costs.
Direct material cost
Direct manuf. labor costs
Indirect manuf. costs
Total manuf. costs
Fixed costs allocated at a rate
of $20M $50
DETERMINING HOW COSTS BEHAVE
The two assumptions are
Variations in the level of a single activity (the cost driver) explain the variations in the
related total costs.
Cost behavior is approximated by a linear cost funct