Question

describe the functions performed by managers; explain the basic concepts of lean production and enterprise risk management; identify the major differences and similarities between financial and managerial accounting; explain the nature and importance of ethics and corporate social responsibility for accountants; identify and give examples of each of the three basic manufacturing cost categories; distinguish between product costs and period costs and give examples of each; explain the differences between variable and fixed cost; prepare an income statement, including the calculation of the cost of goods sold and a schedule of cost of goods manufactured; and understand the cost classifications used in making decisions: differential costs, opportunity costs, and sunk costs.

Answer 1

1. There are numerous functions performed by managers in an organisation but seven major roles played by the manager are as follows:-

a)Planning

b) Organizing

c) Staffing

d) Directing

e) Coordinating

f)Reporting

g) Budgeting

h)Controlling

2. Lean Production is an organized methof for waste minimization without sacrificing productivity within a manufacturing system. Lean Implementation emphasizes the importance of optimizing work flow through strategic operational procedures while minimizing waste and being adaptable.

Enterprise risk management is a management system that enables the organization to assess the risk that can hinder its way to obtain company's goal and plan accordingly to control and manage the risk accordingly. It helps in prioritizing factors and identify the areas that are prone to risk and require utmost attention immediately.

3. The major difference between managerial and financial accounting is as follows:-

Financial Accounting

Managerial Accounting

1. It refers to accounting that is connected with running business enterprise by recording income, expenses, assets and liablities. 2.The users of information are external to business enterprise. 3.It is based on double entry system.

1. It is designed to assist management in its function by application of accounting and statistical techniques. 2. The users of information are the top level management personnel of business enterprise. 3. It is not based on double entry system of accounting.

The similarities are as follows:-

1. Both are connected with financial statements of an organisation.

2.Both use the same accounting principles ad concepts.

3.The database used by both for preparing the financial information are same.

4. The jurisdictions and bodies of work of accouting professionals are governed by the laws and regulations and ethics make the accounting professionals to comply with these laws and regulations.

Corporate Social responsibility means that it is the responsibility of the companies towards the society. In accounting, It helps the company to be socially accountable to its stakeholders and public in large.

5. There are three basic manufactuing cost categories:-

A)Direct Material Cost :- Raw material that becomes the integral part of the product. For Eg:- Processing chip in PC.

B) Direct Labour Cost:- Eg:- Waged paid.

C) Manufacturing Overhead:- Eg:- Indirect materials and Indirect Labour. Eg. Lubricants and cleaning supplies used in manufacturing.

6. Product costs are the costs that are directly related to the production of the product. Examples are direct material, direct labour etc. Whereas, Period costs are generally the indirect cost related to production. For Example:- Overhead Costs, Sales and marketing costs.

7. Variable costs are the costs that are dierctly proportional to the changes in business activities whereas fixed costs are the cost that remains same irrespective of changes in business activities.