Question

Q.1 An organization cannot be profitable if it does not have a clear understanding of the

difference between its fixed and variable costs. Why is this important for management? [3]

Q.2 List some of the changes that can be expected in Management Accounting as a result

of the increase in on-line commercial activity. [3]

Q.3 Why is it necessary to have a pre-determined overhead application

rate in manufacturing? [3]

Q.4 Assume you have just been hired as a management accountant at a manufacturing

plant, list some of the tasks you can be expected to perform [2]

Answer 1

Answer:1

An organization cannot be profitable if it does not have a clear understanding of cost of product of their company in organization mainly two type of cost are found first one is fixed cost and second variable cost.

Difference between its fixed and variable costs

Fixed costs: These cost are fixed in nature it does not change due to change in activity of change or changes in size of production ,it remain fixed.

variable costs: These cost are variable in nature it changes due to change in activity of change or changes in size of production.

importanances: These cost are very important for management it help to management to determined,

• the actual cost of production
• actual cost of product
• to determind the profit for product
• helps in cost reduction etc.

Answer:2

Some of the changes that can be expected in Management Accounting as a resulof the increase in on-line commercial activity:

• change in inventory holding system
• change in Management system
• change in computation of inventory holding cost
• change in inventory dispatch system

Answer:3

pre-determined overhead application rate:

Pre determined overhead rate is apply of overhead of product
Formula = (estimated overhead costs)/ (estimated activity base units)

It is necessary because it helps to determine the relationship between estimated overhead cost and estimated activity based unit.

Answer:4

Task expected to perform by management accountant:

• monitor the cost
• monitor the sales
• determination of budget
• calculation of trends and ratios