Strategic Management Accounting Assessment
Guidance for APC309 Assignment
As a start could you please read the sections supplied, in your student handbook and the other
user guides on the ilearn web, paying particular attention in respect of Plagiarism, Study Skills,
Preparing for an Assignment and Regulations.
Then read the assessment case study very carefully.
Locate the topic matters in your learning materials and read these carefully too.
By now you should be forming a strategy as to how you should start drafting your response.
Once you have identified the key areas of study it will be important to look at some additional
academic sources (beyond the course manuals)
In addition to this initial briefing, please pay attention to the guidance which follows the
tasks.
Recent discussions with a tutor at Sunderland indicate the importance of covering all
theoretical aspects of the tasks.
The Sunderland briefing indicates the following:
As part of your work you may find it helpful to briefly explore the underlying theory behind the
key areas of investigation that you identify before applying them to report.
If you do NOT cover the theory adequately you will find it difficult to pass this
assessment.
Part a) is a wide –ranging and fairly tough area of the study. You will find some relevant
sections in your course manual:
Skim through it all for relevant material but make sure you don’t miss:
Unit 5 (budgets) and in particular Performance evaluation, conflicting aspects, Behavioural
aspects of budgeting
Unit 6 (Management control systems and performance management), especially cost
centres, profit centres and investment centres, Divisionalisation and Responsibility
accounting, measures of divisional performance (return on investment, net residual
income and economic value added)
Unit 9 (Transfer pricing) purpose and different types. International Transfer pricing will be
very relevant because the company operates in 20 different countries and the business
within the group buy from one another.
Also Drury’s Management Accounting for Business is very strong in this area especially:
Divisional financial performance measures (Chapter 20 of the 4th Edition) and Transfer pricing
in divisionalised companies (Chapter 21 of the 4th Edition)
Drury, in particular has some complex examples and I would advise you not to get too
immersed in such complexities of this topic as you only have a limited number of words in
which to deal with it.
Naturally there are a number of terms and concepts to describe, but try to be brief with
description. Overall you need to demonstrate your understanding of managerial accountability,
behaviour and goal congruence. You need to be able to place all this in the context of
divisions of one organisation that trade between themselves (via transfer pricing) as well as
trading with the outside world. Whilst trading between divisions affects the profitability of both
parties involved, as far as the whole organisation is concerned, profit is only earned when
goods or services are sold to outsiders.
In my view, then, it is vital that your work includes a short discussion on the role and
importance of marginal costing within a transfer pricing system. This is important in light of
the requirement to ‘maximise profits for the corporation as a whole’
Whilst it would be difficult to complete this work without numerical examples, please keep
them brief and, for presentational purposes, preferably shown as appendices which are clearly
referred to in your main body of work.
Essentially, try not to lose sight of the fact that the question wants you to discuss the
advantages of making individual managers cost, profit or investment centre
managers.
Despite the wide-ranging nature of this assignment, eventually to score good marks you have
to focus on this particular requirement.
Part b) in many ways, is less demanding than part a) but carries the same weight as part a)
The relevant sections in your course manual are:
Part b) requires you to analyse the three main techniques of absorption costing, marginal
(variable) costing and Activity based costing, linking each to the product costing process.
Remember that total absorption costing is required to assess the full cost of a product or
service (which is what ABC does, albeit in a different manner). Marginal costing, as far as
pricing is concerned, has a number of scenarios where its relevance can be demonstrated
(such as whether to add or drop a product, make versus buy decisions, or ‘one-off’
transactions.
Take care with the different decisions.
Read the instructions attached to the case carefully:
For each approach, identify two managerial decision making situations where that approach is
more appropriate than the other two and justify why you have chosen that approach over the
other two approaches in a particular decision making situation.
You need to look at 2 different decisions which are relevant to each of the techniques. So you
will be looking at 6 decisions in total, indicating, for example, why you would use marginal
costing instead of absorption costing or ABC.
My advice would also be to accompany each decision example with a numerical example
(again you can use an appendix if you wish and summarise the key points in the
main body).
If you are looking for examples of each of the techniques (beyond your course material) then
Colin Drury, Management Accounting for Business, has a comprehensive coverage.
As indicated above, if you do any numerical examples it may be helpful to include them as
an appendix.
In order for an appendix to earn you marks it must be referred to in the main part of your
answer.
Please try to avoid too much description – the work needs to be produced in a critical and
challenging manner where feasible. This will require WIDE READING and correct referencing of
a number of credible academic sources as well as a critical discussion of the strengths and
weaknesses of the techniques.
Don’t forget to reference your work using the Harvard system.