Cost Of Cost Management Accounting Essay - 1623 Words

TASK 1 Name- Sonia Sharma Student ID- 20150076 Unit- 26367 COST MANAGEMENT ACCOUNTING ANSWER 1.1 a) DIRECT COSTS:- A direct cost is defined as the price that can be directly applied to production of goods. The direct cost classifies direct material, direct labour and manufacturing overheads. The direct cost is related to labour, raw material and expenses related to the production of goods. Direct cost is simply as the cost that is applied directly to the product. For example- wages of full time and part time staff. b) INDIRECT COSTS:- Indirect cost can be defined as the cost which cannot be directly applied to the product. In simple words any cost apart from direct material, direct labour and manufacturing overheads is considered as indirect cost. For example- insurance of company building, wages of cleaners working in the company premises etc. c) FIXED COSTS:- A fixed cost is referred to a cost which doesn’t changes with circumstances. If there is a fixed cost of any product or service one has to pay the cost. For example, the rent of the house is fixed that has to be paid every week, no changes are acceptable. For example- salary of full time staff. d) VARIABLE COSTS:- A variable cost is a changing cost. In case of any changes the cost of the product changes. For example, the cost paid to a casual worker may vary. More hours done by the worker will pay him wellShow MoreRelatedCost And Management Accounting1294 Words   |  6 PagesWhy might they be different? Cost And Management Accounting 1. â€Å"Management accounting is a mid-way between financial and cost accounting.† Elucidate. 2. What is the major revenue recognition criterion? 3. What is a trading account? What are its major constituents? What is its major outcome? 4. The cash flow statement is as useful to shareholders and lenders as to management. Explain. 5. (a) â€Å"All future costs are relevant.† Do you agree? Why? (b) â€Å"Fixed costs are really variable. 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