cost accounting Chapter 1

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CHAPTER 1
INTRODUCTION TO COST ACCOUNTING
QUESTIONS
1. Management accounting stresses the informational needs of internal users over those of external users (the focus of financial accounting). Because of this perspective, management accounting provides information in a format that is flexible and relevant to a particular manager‟s usage. Financial accounting, on the other hand, must provide some uniformity in the manner in which information is presented for it to be comparable among companies and in compliance with generally accepted accounting principles. 2. It is more important to have legally binding cost accounting standards for defense contractors than for other manufacturers because government contracts are often awarded on a low-bid basis. Without legally binding cost accounting standards, different bidders could include costs in different categories, making the bids noncomparable. With specified cost accounting standards, there is a higher probability
(although not absolute certainty) that comparison among bids is consistent. Although contracts for nongovernment manufacturers may be awarded on a bid basis, it is more common in this arena to consider a wide variety of factors in addition to cost.
3. A mission statement is important to an organization because it provides a clearly worded view of what the organization wants to accomplish and how the organization uniquely meets or plans to meet its targeted customers‟ needs with products and services. Without a mission statement, an organization may veer away from its “view of itself” and find that it is engaging in activities that are not, and can never be, part of what it wants to do.
4. Organizational strategy is the link between a firm‟s goals and objectives and its operational plans. Strategy is therefore a specification of how a firm intends to compete and survive. Each organization will have a unique strategy because it has unique goals, objectives, opportunities, and constraints.
5. Core competencies

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