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Additional info for ACCA - F2 Management Accounting: Study Text
Answer D Statement (i) is incorrect. Limited liability companies must, by law, prepare financial accounts. The format of published financial accounts is determined by law. Statement (ii) is therefore incorrect. Management accounts do serve as a future planning tool but they are also useful as a historical record of performance. Therefore all three statements are incorrect and D is the correct answer. 3 Cost accounts FAST FORWARD Cost accounting and management accounting are terms which are often used interchangeably.
Other direct expenses are those expenses that have been incurred in full as a direct consequence of making a product, or providing a service, or running a department. Examples of indirect costs include supervisors' wages, cleaning materials and buildings insurance. 3 Direct material Key term Direct material is all material becoming part of the product (unless used in negligible amounts and/or having negligible cost). Direct material costs are charged to the product as part of the prime cost. Examples of direct material are as follows.
Some organisations, however, work on a profit centre basis. Profit centre managers should normally have control over how revenue is raised and how costs are incurred. Often, several cost centres will comprise one profit centre. The profit centre manager will be able to make decisions about both purchasing and selling and will be expected to do both as profitably as possible. A profit centre manager will want information regarding both revenues and costs. He will be judged on the profit margin achieved by his division.