MANAGEMENT ACCOUNTING

About this Course

This course introduces application of techniques in the analysis of relevant data to provide information for managerial planning and control, and decision making. While computational competency is important, this course will emphasize more on the application of techniques, analysing results obtained and making a recommendation that go beyond cost and financial aspects. The topics covered include cost-volume-profit analysis, budgeting and budgetary control, standard costing and variance analysis, relevant cost concept and short term decision making.

Course Learning Outcomes

1) Apply knowledge on various cost and management accounting techniques for managerial decision-making purposes in business organisation
2) Integrate relevant information on cost and management accounting for decision-making purposes in business organisation
3) Demonstrate communication skills in task related to Management Accounting and Control in business organization

Course Syllabus

+ Course Syllabus

1) COST VOLUME PROFIT ANALYSIS
Definition of CVP analysis
Limitations of CVP analysis
Computation of Break Even Point (BEP), margin of safety
Computation of Target Volume at targeted profit
Graphical representations of CV

2) BUDGETING AND BUDGETARY CONTROL
Definition and purpose of budget
Budgeting process and key budget factor
Preparation of budgets - Functional budgets (sales budget, production budget, direct labor budget, materials usage and purchase budget), Cash budgets, Master budgets, Budgeted Profit and Loss
Fixed and flexible budgets
Limitations of budgeting


3) STANDARD COSTING AND VARIANCE ANALYSIS
Types of standards
Determination of standard cost
Basic variance analysis:-
Material (price and usage)
Labour (rate and efficiency)
Variable overhead (expenditure and efficiency)
Fixed overhead (expenditure and capacity)
Sales (price and sales margin)
Reasons for variances
Limitations of standard costing

4) SHORT TERM DECISION MAKING
Relevance cost and benefits
Special Order Decision
Make or Buy Decision
Delete a segment Decision
Limiting Factor Decision
Qualitative factors in decision making

Frequently Asked Questions

Q1 : What is management accounting?
A1 : Management accounting is a form of accounting that aims to improve a company’s profitability by managing, controlling and eliminating expenses. Cost accounting helps businesses determine the costs of products, projects and processes, which shows the company where its earning and losing money and is an integral part of budget planning. Cost and management accounting provides data and analyses reports that can be used by managers to make decisions that will lead to long term profits and growth.

Q2 : Explain the role of financial reporting in the development of management accounting.
A2 : Management accounting refers to the process of recording financial and non-financial data to provides a road map towards a better decision-making process to the internal management of an entity.

Q3 : Why is cost and management accounting important?
A3 : Companies are always looking for ways to boost sales and increase profits. Revenue, cost and profit are all important factors in determining the success of a business. To maximise profits and sustain profitability, revenue, as well as cost, should be managed. Effective cost management will free up cost and capital funds, which then can be reinvested to grow the business or spent on other investment opportunities.

Q4 : How to study cost and management accounting
A4 : When looking to study cost and management accounting, learn the basics. Obtain a strong foundation and understanding of the principles and techniques, and then practise, practise and practise. Be patient. If you do not get it the first or second time around, by the third or fourth exercise things will start looking up. Use the same structure and approach to answering questions, and make sure to read the required section of a question before you read the body. Answer a question using the same layout and structure you practised.