This module aims to provide students with a comprehensive understanding of the role of the Management Accountant. The students should be able to apply management accounting techniques to cost products and services. This knowledge provides the student with techniques relevant to problem solving in a work situation.
The scope of Management Accounting
The history and development of management accounting; the function of management accounting; comparison of the relationship between management and financial accounting and the role of the management accountant in the changing competitive environment; compare and contrast management reports used in a commercial enterprise, a charity and the public sector.
Cost and revenue classification
Classification of costs and revenues into direct and indirect, period and product, opportunity costs, avoidable and unavoidable, incremental, variable, fixed, semi-variable, stepped, decision making costs and non-manufacturing costs.
Accounting for materials and labour
Components of product costing; materials controls procedure, pricing and valuation of inventories (FIFO, LIFO and Weighted Average); use of quantitative modules for planning and control of inventories (EOQ, MRP, TQM and JIT); accounting for payroll and labour; incentive schemes; remuneration methods; labour turnover ratio and labour efficiency ratio.
Accounting for overheads
Traditional approach to overhead absorption; calculation of overhead absorption rates; pricing jobs and services for customers; profit calculation using mark-up and margin; plant-wide rates versus individual rates; calculation of under-absorbed and over-absorbed overheads; criticisms of the traditional overhead absorption approach; activity-based costing approach to overhead allocation.
Service and operation costing
Identify situations where the use of service/operation costing is appropriate and carry out service cost analysis in service industry situations.
Process costing
Differences between job costing and process costing; calculation of the average cost per unit using a process costing system; ledger accounts showing the accounting treatment of normal losses, abnormal losses and abnormal gains; accounting for sale of scrap; calculation of the average cost per unit using the statement of equivalent units where there is closing work-in-progress; previous process costs; calculation of the average cost per unit using weighted average and FIFO where there is opening work-in-progress; accounting for joint products and by-products.
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Other Assessment(s) | 30 |
| Formal Examination | 70 |