Explain the difference between financial accounting and management accounting. Ensure your explanation clearly explains the purpose of management accounting.

Question 1: Short answer questions

1. Explain the difference between financial accounting and management accounting. Ensure your explanation clearly explains the purpose of management accounting.
2. Car Services Ltd produces custom tow bars and bull bars for utes and cars. Each customer’s order is treated as a separate job so costs can be tracked for each customer.

Tasks

Briefly explain the following:

1. The meaning of the term cost object. Identify the cost object that would be used by Car Services Ltd when recording costs.
2. The difference between a direct cost and an indirect cost. Identify examples of both direct costs and indirect costs for the cost object.

1. Salmon Ltd provides you with the following information on the costs of testing the water quality of their wastewater.

Task

Using the high low method, calculate the fixed cost per month and the variable cost per test.