This module requires a knowledge and comprehension of Management Accounting 1. The module aims to provide students with a comprehensive understanding of the management accounting systems and techniques employed by the Management Accountant. This knowledge provides the student with techniques relevant to problem solving in a work situation.
Marginal costing and absorption costing
Theories behind marginal and absorption costing; compute profits using marginal and absorption costing; accounting treatment of fixed production overheads using marginal and absorption costing; accounting treatment of selling and distribution overheads and administration expenses; reconciliation of marginal and absorption profits and losses for a period; reasons for the use and problems of marginal and absorption costing.
Cost volume profit analysis
Relationship between contribution and volume; CVP approach; breakeven analysis: target profit, C/S ratio, margin of safety and breakeven point; contribution and profit volume graphs; operating leverage; CVP in a sales mix; separation of semi-variable costs using high-low method; assumptions of CVP; use of marginal costing in decision making.
Capital investment appraisal
Time value of money using compounding and discounting; evaluation of long-term investment opportunities through the use of: net present value, internal rate of return, accounting rate of retun and payback; benefits and drawbacks of investment appraisal techniques; apply sensitivity analysis to cash flows. Absorption and Marginal costing.
The budgeting process
Budgetary control process; budgeting terminology; advantages and disadvantages of budgeting; stages in the budgetary process; preparation of functional budgets and the master budget; theory of incremental budgets; zero-based budgets and rolling budgets; the use of IT in relation to budgeting.
Standard costing and variance analysis
Operation of a standard costing system; establishing cost standards in manufacturing and service industries; use of standards to minimise waste and maximise efficiency; type of cost standards; purposes of standard costing; variance analysis for sales and cost variances; reconciliation of budget and actual profits using variance analysis; the use of IT in relation to standard costing and variance analysis.
|Module Content & Assessment