1. Variable vs. Fixed costs:

a. Variable costs vary in direct proportion to changes in activity, but unit variable cost is constant.

b. Fixed costs are invariant to activity (do not vary), but unit fixed costs vary inversely (opposite) with activity.

2. Distinguish managerial accounting from financial accounting.

Financial accounting generally involves external reporting using financial statements prepared with GAAP (i.e., the provision of general-purpose information for external decision-makers); in contrast, managerial accounting is all about the provision of non-GAAP information for internal decision-makers (generally). Key differences are the end-user(s) of the information; the presence or absence of GAAP; historical or future information; periodic or ad-hoc nature of reports; and level of reporting detail.