ACCT 1A Lecture Notes - Lecture 3: Indirect Costs, Fixed Cost, Management Accounting
Document Summary
Management accounting: difference between management and financial accounting. Shareholders, potential investors, creditors, government taxing agencies and regulators, suppliers and customers: annual reports, registration statements, cash flow statements, ratios ma- internal users. Individual employees as well as teams, departments, regions and top management of an organization: bank balances, inventory info, planning, operating and control. Planning: planning involves the development of both short term (operational) and long term (strategic) objectives. Operating: what managers must do to run the business on a day- to- day basis. Control: involve the motivation and monitoring of employees, direct and indirect costs. Direct costs can be conveniently and economically traced to a cost object. Indirect costs cannot be conveniently or economically traced to a cost object. Instead of being traced, these costs are allocated to a cost object in a rational and systematic manner. Fixed costs stays the same in total. They vary when expressed on a per unit basis.