AC3097 Management accounting
This course will be examined by one unseen written paper of three hours and 15 minutes.
Students may bring into the examination hall their own hand held electronic calculator. If calculators are used they must satisfy the requirements listed in Section 4, Assessment for the programme, of the Detailed Regulations.
Accounting paper will be provided.
Prerequisites (applies to degree students only)
AC1025 Principles of accounting.
This course is designed to give students a grounding in the key concepts and techniques of management accounting, and to prepare them for the use of recent innovations in the management accounting function. Traditionally concerned with the recording and measurement of costs, management accountants have increasingly become concerned with supporting the management of organisational strategy. This entailed the inclusion of non-financial information in management accounting reports that are becoming increasingly tailored to organisational circumstances. Underlying this work of information provision is a core of economic principles, to which reference is made throughout the course.
The syllabus is arranged in three parts. The first section introduces traditional and contemporary functions of management accounting and some of the key economic concepts underlying management accounting. The second section covers costing principles and costing systems, with some recent managerial applications, such as Activity Based Management. The third section puts costing principles and systems into context by explaining what roles they would play as part of an organisation's performance measurement and strategic management accounting systems.
Modern management accounting: Overview; Definition; Traditional management accounting; Ongoing changes; The "new" management accounting function.
Decision-making: Economic foundations; Uncertainty; The value of information; Relevant information and relevant costs.
Cost behaviour: Cost terminology; Cost behaviour; Fixed & variable costs; CVP (cost-volume-profit analysis); Cost estimation.
Costing and pricing: Direct vs indirect costs; Short-term decisions with one scarce resource; Linear programming; Shadow prices and opportunity costs.
Budgeting and control: Budgets; Control; Direct and indirect cost variances; Variance analysis; Beyond Budgeting.
Traditional cost systems: Systems in accounting; Job, batch & process costing; Overhead allocation; Overhead absorption; Accounting for inventory; FIFO; Weighted average method.
Activity Based Costing (ABC): "Overhead creep"; Product diversity and accounting uniformity; Cost attribution; Cost pools; Cost drivers; Activity analysis; Implications for pricing; Activity Based Management (ABM); Problems with ABC.
Inventory costing: Standards; Actual, normal & standard costing; Standard costing systems; Output levels and profits; Production volume variance; Absorption (or full) costing; Marginal (or direct) costing; Over and under-applied overheads; Income effects.
Performance measurement systems: Divisional performance measurement; Components of the performance measurement system; Responsibility centres; Financial measures; Transfer prices; Shareholder value concepts; Non-financial performance measures.
Strategic management accounting: Introduction to strategy; Target costing; Life cycle costing; Cost of quality; The Balanced Scorecard; The future of management accounting.