A management Accountant is an officer responsible for management accounting role in an organization. The core significant role of a Management Accountant lies in the decision making process of an institution. There are several roles of a Management Accountant in an organization which includes but not limited to establishing and administering adequate plans for operations control, administering tax procedures and policies and supervising as well as coordinating reports preparation to government agencies (Jeffrey C., 2011).
At Southwest Airlines, the Senior Vice President Finance and Chief Financial Officer fulfils the management accountant roles in practice. She is entrusted with the responsibilities such as airline’s overall finance activities which include accounting, tax, fleet planning, insurance and reporting among others (Laura, 2012).
Value chain is generally a series of primary and supportive activities that an organization carries out to change inputs into value-added outputs for its targeted external consumers. The main value chain activities include inbound and outbound logistics, marketing and sales, operations and service (Michael, 1985).
Idle time is the time lost by employees during production. It’s the difference between the time for which the employees are paid and the time they actually spend in production. In other words, its time paid for but no production was obtained from the employees. Idle time can be caused by inefficient scheduling, material shortage and machine breakdowns among others.
Supply chain is defined as a system of institutions, technology, information, people, resources and activities involved in moving a certain manufactured goods or service from the supplier to consumer.
Conversion cost is the sum of time spent by employees working on producing a product and overhead costs. This cost includes direct and indirect expenditure incurred in moving one production process to another. In essence, conversion cost can be expressed as direct labor cost plus manufacturing overhead cost (Conversion Cost, 2011).
Period costs are selling and general administrative expenses associated with passage of time and not with the output units thus not a part of manufacturing process. Examples of period costs include interest, rent and depreciation which are charged against sales revenue in the same period they are incurred.
Inventoriable costs refer to costs of inventory on hand which are treated as assets until they are sold. These costs are considered to be part of merchandising cost which includes direct labor, direct material and manufacturing overheads (Barron Educational Series, Inc., 2005).
Finished goods are manufacturer’s inventory products which have completed the required production process but are awaiting sale. They are treated as current assets in the organization’s balance sheet.
Direct materials are basically the cost of raw materials easily and economically identified with individual units of production. They are also referred to as raw stock, raw materials and productive materials.
Relevant range is an activity range over which changes in cost are of utmost interest to management. In essence, it is a range of output which an organization has had a direct experience which means that such an organization has detailed analyses of how costs will behave within a range of output.
Cost driver refers to any kind of an activity or a sequential set of activities that take place within an organization causing costs to be incurred. The three types of cost drivers are volume, charge and time.
Cost object is any element for which cost data is desired. Such cost data items may include service function, contract and customers among others. Number of cost objects that can be identified and the frequency of measuring the costs normally vary between organizations.
Prime costs, also referred to as direct costs, are costs incurred and may be conveniently identified or traced to the final product. They are equal to direct materials, direct expenses and direct labor.
Manufacturing overheads, also known as production or factory overheads are indirect expenses incurred in connection with production. They relate to all indirect factory expenses for example depreciation of machinery, factory power, factory rent and heating.
Work-in process refers to assignments that have been started but not yet completed to a level where a fee note can be raised. The net change in work-in process is either an expense or an income in the profit and loss account.
Fixed costs are costs that remain constant irrespective of the level of production that is, they do not change with the change in level of production. Examples of fixed costs are rent, salary and depreciation.
Variable costs refers to the expenses that are directly associated to the volume of production. This means that, higher quantity of production would result to higher variable costs. Examples of variable costs are direct materials, labor and expenses.
Indirect costs are costs which cannot be conveniently identified or traced to a particular final product. They are usually incurred for the benefit of a number of units or departments in an organization. These costs are also known as fixed costs.
Direct costs are costs that are related or traced to the final product or operation. They are normally incurred specifically for a unit produced and are also referred to as prime costs. These costs are direct materials, labor and expenses.
Raw materials are natural/basic resources from which a final product is made for the end consumer.
References
Barron Educational Series, Inc., (2005). Web.
Conversion Cost (2011). Web.
Jeffrey C. (2011) Management Accountant, Web.
Laura, W. (n.d.). 2012. Web.
Michael, P. (1985) Value Chain. Competitive Advantage. Web.