This module covers the role of cost and management accounting information and deals with the generation of costs for stock valuation and profit measurement. It introduces students to the techniques and knowledge necessary to generate, interpret, record and control material, labour and overhead costs.
The module develops this further in the context of decision making planning and control. It aims to develop a knowledge and an appreciation for the different purposes for which costs are used.
The module also aims to develop an awareness of modern developments in management accounting and the importance of non-financial data in the information process.
The Role of Management and Cost Accounting
. Cost concepts and classification
. Product cost determination
. Material costs and control
. Labour costs and control
. Overhead costs including traditional and activity-based costing systems
. Cost Accounting Systems/ Design of a Cost System
. Accounting entries for a job costing system
Information for Decisions
. Marginal costing compared with absorption costing; reconciliation of profits given by each method.
Cost volume profit analysis and break-even as a short range decision-making tool; contribution theory and margin of safety.
. The concept of opportunity and relevant costs.
. Basic and multiple product contribution break-even charts and profit/volume graph
. Limiting factors, special pricing decisions, make or buy decisions
. Problems of shut down and divestment decisions.
. Introduction to pricing methods and an appreciation of transfer pricing.
. Incorporating uncertainty into decision making
Budgeting and Budgetary Control
. Purposes of budgeting; the role of the budget committee and the budget manual.
. Types of budgets; the master budget, cash budgets.
. Preparation of functional budgets for operating and non-operating functions.
. Identification of the key budget factor and budget period.
. The limitations of incremental budgeting,
. Zero based budgeting, activity based budgeting, beyond budgeting.
. Introduction to flexible budgeting.
. Cost reduction and value analysis
Management Control, Standard Costing and Variance Analysis
- Principles of an effective management control system
. Basic principles of standard costs; establishment of standards.
. Types of standards.
. Preparation of a standard product cost.
. Variance analysis covering:
Materials: price and usage;
Labour: rate and efficiency;
Variable overhead: expenditure & efficiency variances;
Fixed overhead: expenditure and volume variances,
capacity and efficiency variances.
. Sales: price and volume.
. Revision of standards, planning and operational variances
. Reconciliation of actual and budgeted profit.
. Standard cost book-keeping.
. Non financial appraisal systems including the balanced scorecard.
Strategic Management Accounting
. An understanding of strategic management accounting--its uses and advantages
. Conventional management accounting: strategic problems:
key success factors
elimination of non-added value activities
. Strategic cost analysis--consumer benefits and costs.
Students will be exposed to formal lectures and will also engage in problem solving, in class and externally, to apply the concepts introduced and to develop critical abilities. Formative feedback will be provided by assessing and discussing students solutions to assigned problems.
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Formal Examination | 80 |
| Other Assessment(s) | 20 |