MODULE: A2
MANAGEMENT ACCOUNTING
LEVEL
ASSOCIATE
TOTAL LEARNING HOURS 200
MODULE AIMS
The Aims of this Module are:
To develop in students a knowledge and Understanding of the Management Accounting
Concepts and Techniques associated with the Internal Management of a Business within a
Changing Environment.
To enable students to identify appropriate Management Accounting Techniques for Decision
Making, Planning and Control; and apply these Techniques in the generation of Management
Accounting Reports.
To develop in students a critical appreciation of the various Management Accounting
Techniques adopted for Planning, Decision Making and Control.
LEARNING OUTCOMES
The knowledge, understanding and cognitive, practical and transferable skills which a
student is expected to be able to demonstrate after studying this module is expressed
in the following learning outcomes. These are grouped under appropriate syllabus
headings.
Management Accounting and the Changing Business Environment
(10 Hours / One Week)
By the end of this Syllabus Topic the student will be able to:
Identify Management Accounting’s developing role as part of a Business Information System.
Describe the impact on Management Accounting of –
Flexible Manufacturing Systems
Production Management Systems
Materials Requirement Planning
Just in Time Systems (JIT)
Total Quality Management (TQM)
Word Class manufacturing
Activity Based Costing (ABC)
Standard Costing and Budgetary Control (60 Hours / Three Weeks)
By the end of this Syllabus Topic the student will be able to:
Understand how Standards for Performance are prepared
Apply techniques to Investigate, Interpret and Analyse Variance Statements
Describe Budgeting as a Planning and Control activity
Prepare Fixed and Flexible Budgets, Master and Subsidiary Budgets
Describe management participation in Budget preparation, and in the exercise of Budgetary
Control
Prepare accounting statements using Variance Accounting Techniques
Explain the use of Financial Models in Budgeting including Learning Curve Theory
Explain what is meant by Zero-based Budgeting and demonstrate the ability to
prepare Budgets from given data using the technique
Apply Probability and Standard Deviation to the Budgeting process
Explain the Behavioral and Control aspects of Budgeting
Identify the relevance, strengths and weaknesses of Budgeting and Budgetary Control
against current issues in Management Accounting such as Activity Analysis, Just-In-Time
concepts, TQM and Activity Based Budgeting
Decision-Making and Cost/Volume/Profit (CVP) Analysis (70Hours / Four Weeks)
By the end of this Syllabus Topic the student will be able to:
Analyse decisions into their various categories –
Make or Buy
Discontinuing a Product
Spare Capacity
Product Mix Constraints
Explain and demonstrate the ability to apply the following concepts to a range of
decision-making situations –
Relevant Costs
Differential Costs
Incremental Costs
Attributable Costs
Opportunity Costs
Apply CVP Analysis to a range of Decision-Making situations
Pricing and Transfer Pricing (20 Hours / Two Weeks)
By the end of this Syllabus Topic the student will be able to:
Explain how market conditions can affect Pricing Policy
Explain and distinguish between Price Leadership and Price Discrimination
Explain and apply the following concepts –
Full Cost Pricing
Minimum Pricing
Market Penetration Prices
Skimming Prices
Product Line Prices
Shadow Prices
Describe the four main bases for setting Transfer Prices
Explain the function of a Transfer Price and the role of Transfer Pricing in the absence of an
External Market
Explain Transfer Price as an Opportunity Cost
Explain how Linear Programming can be used to implement a Transfer Price
Responsibility Accounting (20 Hours / Two Weeks)
By the end of this Syllabus Topic the student will be able to:
Explain what is meant by Responsibility Accounting
Describe the advantages and problems of –
Responsibility Centres
Profit Centres
Investment Centres
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Describe the degree of authority which may be given to the manager of a Responsibility
Centre
Describe ways in which Divisional Performance targets may be set
Describe methods by which Divisional Performance may be assessed
Explain the importance of and apply Return on Investment as a key financial ratio
Compare the use of Residual Income and Return on Investment when evaluating the
profitability of an investment.
Describe how inter-firm or interdepartmental comparison can be used in Responsibility
Accounting.
Capital Investment Appraisal (20 Hours / Two Weeks)
By the end of this Syllabus Topic the student will be able to:
Explain the Purpose of Capital Investment Appraised
Calculate
Payback Period
Accounting Rate of Return
Net Present Value
Internal Rate of Return
Explain the Advantages and Disadvantages of each Technique
Revision (One Week)
Assessment
Achievement of these Learning Outcomes will be reflected in student responses to a THREE
HOUR Examination.
Examination Structure
Five Compulsory Questions
Standard Costing and Budgetary Control (Weighted 25%)
Decision Making and CVP Analysis (Weighted 30%)
Pricing and Transfer Pricing (Weighted 15%)
Responsibility Accounting (Weighted 15%)
Capital Investment Appraisal (Weighted 15%)
Indicative Reading
Current Editions of the following Textbooks and Journals are recommended.
Textbooks:
Upchurch A “Management Accounting Principles and Practice” FT Pitman
Drury C “Management and Cost Accounting” Chapman and Hall
Lucey TP “Management Accounting” DP Publications
Journals:
Financial Accountant
Management Accountant
Accountant
Journal of Accountancy
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