Module Aims:This module requires a knowledge and comprehension of Management Accounting 1 & 2. The module aims to provide students with a comprehensive understanding of the role of the Management Accountant. The students should be able to design management accounting systems to suit the needs of businesses and to evaluate the performance of businesses using appropriate performance measures.
Review of Management Accounting Cost Terms and Concepts
Review of the role of the Management Accountant and the comparison of the relationship between management and financial accounting. 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.
Cost and Management Accounting techniques
On completion of their studies students should be able to compare and contrast costing systems, such as:• Job costing and service costing:Materials recording procedure; Pricing and issue of materials; Control accounts; Integrated cost accounting systems; Planning and control of stocks; Just in time; Back-flush accounting; Theory of constraints; Materials requirements planning; Throughput accounting; Role of MRP and ERP systems; Total quality management; Enterprise resource planning.• Activity-Based costing:The emergence of ABC systems, the concepts behind it and advantages and disadvantages; Comparison of traditional and ABC systems; Designing ABC systems – cost drivers, cost pools; ABC and service industries; Benefits of ABC; Criticisms of ABC; ABC in practice.• Marginal costing and absorption costing:Theories behind marginal and absorption costing; Computation of profits using marginal and absorption costing; Reconciliation of marginal and absorption profits and losses; Analysis of fixed production overhead into an expenditure variance and a volume variance; Reasons for the use and problems of marginal and absorption costing.
Strategic Management Accounting
Introduction to Strategic Management Accounting; Assessing strategic change; Benchmarking; Competitor profitability analysis; Customer profitability analysis; Life cycle costing; Kaizen costing; Business process re-engineering; Target costing; Value chain analysis; Cost of quality; Shareholder value analysis; Economic value added and residual income.Non-financial measures of performance and key performance indicators; Mission statement and how it is linked to strategy; Balanced Scorecard and how it is used to assist in the achievement of the organisations strategy.
Transfer pricing in divisionalised companies
Functional and divisional organisational structures; Centralised and decentralised decision making approaches; The advantages and disadvantages of divisionalisation and divisional performance measures; Theory of transfer pricing, including perfect, imperfect and no market for the intermediate goods; Alternative transfer pricing methods; Resolving transfer pricing conflicts; Domestic and international transfer pricing recommendations; Advice on resolving transfer pricing conflicts and ethical dilemmas which occur in the management of divisional performance.
Decision making where there are constraints
Types of contraints; Use of marginal costing in short-term decision making; Use of limiting factor analysis and linear programming using graphs and simultaneous equations; Shadow prices; Calculate slack and explain its implications for decision making and decision trees for multi-stage decision problems.
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Other Assessment(s) | 30 |
| Formal Examination | 70 |