Aim
To
develop knowledge and understanding of the application
of management accounting techniques to support
the management processes of planning, control
and decision making.
Objectives
On
completion of this paper candidates should be
able to:
-
explain the role of management accounting
within an organisation and the requirement
for management information
-
describe costs by classification and purpose
-
identify appropriate material, labour and
expense costs
-
understand the principle methods of costing
and apply them in straightforward scenarios
-
understand and demonstrate the cost factors
affecting production and pricing decisions
-
understand the basic principles of performance
management and
-
demonstrate the skills expected in Part
1.
Content
Accounting
for management management processes, nature
of decision making, management information requirements,
contribution and scope of management accounting,
maintenance and improvement of accounting information
systems.
Cost
accounting role and purpose, cost and revenue
classification, different costs for different
purposes, nature of internal reporting function
(cost, revenue, profit and investment centres),
comparison with external financial reporting.
Elements
of cost standard and actual cost for materials
(including methods of materials pricing) labour,
direct and indirect expenses, allocation and
apportionment methods, calculation of absorption
rates, treatment of capacity variations, reciprocal
service, stock control and re-ordering.
Costing
systems the operation of systems and the
calculation of cost under job, batch, contract,
process and standard costing methods, full absorption
and marginal costing, application of costing
methods to service based industries, activity
based methods (outline only).
Decision
making cost behaviour - fixed, variable
and semi-variable costs, opportunity costs and
relevant cost concepts, cost volume profit analysis,
break-even charts, “make or buy” type situations.
Pricing
policies and procedures preparation of cost
estimates, tendering and quotations, pricing
methods (full cost plus, demand based, marginal).
Performance
measurement use of indicators to measure
productivity, unit costs, resource utilisation,
profitability, quality of service.
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