Briefly describe some differences between financial accounting and managerial ac

Question

Briefly describe some differences between financial accounting and managerial accounting.

What is a line department? What is a staff department? An accountant would be in which category, line or staff?

Name 4 management functions.

There are three types of manufacturing costs; define each one: a. Direct Materials b. Direct Labor c. Factory Overhead

Name 6 different types of cost that would be considered factory overhead. (You may wish to refer to the article on Manufacturing Costs posted in the Chapter 18 materials.) What are indirect materials and indirect labor?

Define each of the following a. Prime Costs b. Conversion Costs What is a product cost? What is a period cost?

Direct materials, direct labor and factory overhead are in which category, product or period costs?

Explanation / Answer

1.

There are a number of differences between financial and managerial accounting, which fall into the following categories:

2. (1) the line department in which the departments are revenue generators (manufacturing, selling), and their managers are responsible for achieving the organization's main objectives by executing the key functions (such as policy making, target setting, decision making); (2) the staff department, in which the departments are revenue consumers, and their managers are responsible for activities that support line functions (such as accounting, maintenance,personnel management).

Accountant will comes in staff department

3. Management Functions: Planning, Organising, Staffing, Directing and Controlling

4 A) Direct Meterial:- Direct materials cost the cost of direct materials which can be easily identified with the unit of production. For example, the cost of glass is adirect materials cost in light bulb manufacturing. The manufacture of products or goods required material as the prime element.

B) Direct Labour: - Direct labor is production or services labor that is assigned to a specific product, cost center, or work order. When a business manufactures products, direct labor is considered to be the labor of the production crew that produces goods, such as machine operators, assembly line operators, painters, and so forth. When a business provides services, direct labor is considered to be the labor of those people who provide services directly to customers, such as consultants and lawyers. Generally, a person who is charging billable time to a customer is working direct labor hours.

C) Factory Overhead:- Factory overhead, also called manufacturing overhead or factoryburden, is the total cost involved in operating all production facilities of amanufacturing business.

5. Name 6 different types of cost that would be considered factory overhead.

1. Factory Supplies, 2.Depreciation, 3. Factory Rent, 4. Factory Building Tax, 5. Production supervisor salaries, 6.Equipment maintenance.

Indirect Labour : - Indirect labor is the cost of any labor that supports the production process, but which is not directly involved in the active conversion of materials into finished products. Examples of indirect labor positions are: Production supervisor.

Indirect Meterial : -  indirect material is a category of indirect cost. Indirect materials are materials that are used in a production process, but are not directly traceable to a cost object. Indirect material costs are considered overhead costs and treated accordingly.

6.A) Prime Cost: - the direct cost of a commodity in terms of the materials and labour involved in its production, excluding fixed costs.

B) Conversion costs are the combination of direct labor costs plus manufacturing overhead costs. You can think of conversion costs as the manufacturing or production costs necessary to convert raw materials into products.

C) Product cost refers to the costs used to create a product. These costs include direct labor, direct materials, consumable production supplies, and factory overhead. Product cost can also be considered the cost of the labor required to deliver a service to a customer.

D) Period costs are not a necessary part of the manufacturing process. As a result, period costs cannot be assigned to the products or to the costof inventory. The period costs are usually associated with the selling function of the business or its general administration.

7. Direct Meterial, Direct labour and Facotry overhead will comes under product cost

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