Aqa Accounting- Costs And Contribution

Front 1

What is the purpose of cost and management accounting?

Back 1

Cost and management accounting enables the managers of a business to know the cost of the firm's output and the revenue from sales.

Front 2

What are the three elements of cost.

Back 2

Materials, labour and expenses.

Front 3

Define fixed costs.

Back 3

Fixed costs remain fixed over a range of output levels and varies with time rather than activity.

Front 4

Define a variable cost.

Back 4

Variable costs vary directly with output.

Front 5

Define a semi-variable cost.

Back 5

Semi-variable costs combine a fixed and a variable element.

Front 6

Define marginal cost.

Back 6

The marginal cost is the cost of producing one extra unit of output.

Front 7

What is the calculation for contribution per unit?

Back 7

selling price per unit - variable cost per unit = contribution per unit

Front 8

What is the layout of a marginal costing statement?

Back 8

sales revenue
- variable costs
= CONTRIBUTION
- fixed costs
= PROFIT

Front 9

What are four advantages of a marginal costing statement?

Back 9

1. Contibution is clearly identified.
2. With the marginal cost of output identified, the managers can focus on the contribution provided by the output.
3. The effect on costs of changes in sales turnover can be calculated.
4. It helps with decision making in the forms of: costing, make or buy, acceptance of additional work. price setting, optimum use of scarce resources.