Question

You are required to read each statement carefully and present your agreement or disagreement

With the statement. You must support your answer with logical answers. Your answer should not

Exceed three statements for each statement.

a. It is important that ideal standards should be used as a benchmark for developing practical

Standards.

b. Every type of variance should be reported to the management for improving efficiency

Of the organization’s operations.

c. The contribution margin is an alternative to the gross profit.

d. Total fixed cost remains the same but per unit variable cost changes.

e. Management accounting is not limited to the finance department. Scope of management

Accounting is in almost every department.

Answer 1

A.

ideal standards can only be achieved under the best and perfect work circumstances.These standards can be helpful in measuring the employees’ efficiency and maximum production capacity of the plant. Therefore I agree with the ideal standard should be used as a benchmark for developing practical standards

B.

In project management, variance analysis helps maintain control over a project's expenses by monitoring planned versus actual costs. Effective variance analysis can help a company spot trends, issues, opportunities and threats to short-term or long-term success. Therefore the various should be reported to the management for improving efficiency and to attain management standards

C.

An alternative to the gross margin concept is contribution margin, which is revenues minus all variable costs of sales.In general, the contribution margin tends to yield a higher percentage than the gross margin, since the contribution margin includes fewer costs.

D.

Fixed cost remains same but the variable cost changes as per production from the company.number of output is directly proportional to the variable cost where as total fixed cost remains and changed where ever there is change in output

E.

Management Accounting does not involve only in financing departments but it also plays a crucial role in decision making process in cost allocation process or in any other company management process therefore the scope of management Accounting does not limit only for the financing purpose