MIDLANDS STATE UNIVERSITY
MANAGEMENT SCIENCES DEPARTMENT
Management Accounting (MBM771)
Course Outline
Objectives:
The module covers concepts of managerial accounting for internal decision-making in a variety of
organisational settings. It aims to develop students’ professional competencies such as strategic
thinking, risk analysis, decision making, ethical reasoning and communication.
1. Accounting Information for Decision Making
 Characteristics of financial accounting and managerial accounting information
 Decision making in organisations
 Relevant costs in decision making
 Classification of costs
2. Cost-Volume Profit (CVP) Analysis
 The cost-volume-profit relation
 CVP analysis and profit planning
 CVP and operating risk
 Decision making in the short term
3. Reporting and assigning costs for income statements:
 Absorption costing
 Variable costing
 Throughput costing
4. Activity-Based Costing (ABC) and Activity Based Management (ABM)
 Hierarchy of ABC costs and cost drivers
 Assigning costs using ABC systems
 Decision usefulness of ABC systems
 Activity-Based Management (ABM)
5. Budgeting
 Objectives of budgeting
 Preparing a master budget
 Budgets as performance benchmarks



Budgets, incentives and rewards
Budget responsibility
Operating budgets
6. Standard Costs and Variance Analysis
 Establishment of standards
 Types of standards
 Use of standards
 Interpreting and using cost variances
 Non-financial controls
7. Management of Revenues and Costs
7.1 Continuous Cost Improvement
 Value Chain Analysis
o Value added and non-value added activities
o Supply chain analysis
o Just in Time production
o Using the internet to improve inventory supply
 Building desired profit into decisions
o Target costing
o Kaizen costing
o Life cycle costing
7.2 Price Management
 Pricing Methods
o Cost based pricing
o Market based pricing
o Other pricing methods
 Peak load pricing
 Price skimming
 Penetration pricing
 Price gouging
 Transfer prices
 Government regulations and pricing
o Predatory pricing
o Collusive pricing
o Price discrimination
o Dumping
8. Performance Evaluation and Compensation

Assigning responsibility for decision making
o Centralised and decentralised organisations
o General versus specific knowledge
o Technology and globalisation

Responsibility Accounting
o Cost centres
o Revenue centres
o Profit centres
o Investment centres
Income based performance evaluation
o Return on investment
o Residual income
o Economic value added


Motivating performance with compensation
o Bonus system incentives
o Long term incentives

Transfer price policies
o Transfer prices and conflicts among managers
o Setting an appropriate transfer price
 Cost based
 Activity based
 Market based
 Dual rate
 Negotiated
o Additional transfer price considerations
 International income taxes
 Transfer prices for support services
 Setting transfer prices for internal services
 Transfer of corporate overhead costs
Assessment:
Coursework
Final Exam
Reading Texts
40%
60%
1. Drury, C. (2012). Management and Cost Accounting.
2. Eldenburg, L.G., & Wolcott, S. K. (2005). Cost management: Measuring, monitoring and
motivating performance. Wiley: Hoboken, NJ.
3. Balakrishnana, R., Sivaramakrishnan, K. & Sprinkle, G.B. (2009). Managerial accounting.
Wiley and Sons.
4. Bhattacharyya, D. (2010). Management accounting. Pearson: India.
5. Davis, C.E., & Davis, E. (2011). Managerial accounting. John Wiley & Sons.
6. Any other textbook on management