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202 Management Accounting                    100

Course Objectives : To provide the students with an in-depth knowledge of Management Accounting to enable them to apply its methods and techniques for preparing and presenting information for management decision-making and control purposes. Formulation of  strategic plan for achieving efficiency and effectiveness in business operation is also the focus of this course. On completion of this course, the students will be able to:

a.  discus the role of management accounting and quantitative analysis within the organization.

b.  apply management accounting techniques in Planning, control and decision making situations.

c.  illustrate and evaluate absorption and marginal costing methods for decision making and use them in various decision-making situations.

d.  identify, discuss and implement a range of product pricing methods applicable in particular operating situations.

e.  prepare and evaluate plans, budgets and forecasts.

 

202. 01 Introduction

Definition of Management Accounting; Relationship between Management Accounting and Financial Accounting; Relationship between Management Accounting and Cost Accounting; Role of Management Accounting, Characteristics of Management Accounting Information; Changing Business Environment: Just-in- Time (JIT), Total Quantity Management (TQM), Process Reengineering, Automation, Theory of Constraints (TOC), Benchmarking and Continuous Improvement, Creating Value in Organization; Accounting and Ethical Conduct: Ethical Behavior, Standards of Ethical Conduct for Management Accountants and Ethical Conduct.

 

202.02 Cost-Volume – Profit Analysis

Uses of Cost-Volume-Profit (CVP) Analysis; Break-even Point and Shut-down Point; Graphical Approach of CVP Analysis in a Milti-product Environment; ABD’s Effects on CVP. Assumptions and Limitations of CVP Analysis; Application of linear programming in multi-product decision making.

 

202. 03 Absorption and Variable Costing

An Overview of Absorption and Variable Costing: Variable Costing and Absorption Costing Income Statements; Reconciliation of Absorption Costing Income with Variable Costing Income; Advantages and Disadvantages of Absorption Costing and Variable Costing; variable Costing and the theory of Constraints; Impact of JIt Inventory Methods.

 

202. 04 Pricing

Basic Economic Pricing Concepts: Customer Demand, Price Elasaticity of Demand, Market Structure and Price. Establishing Optional Price and Output; Cost-Plus Pricing Methods: Variable Cost Pricing, Differential Cost Pricing, Full Cost Pricing, Conversion Cost Pricing and Direct Cost Pricing; ABC and Pricing.

 

202. 05 Relevant Costing

The Concept of Relevance; Relevant Cost and Sunk Cost; Using Relevant Cost Information in Decision Making. Special Order Decision, Make, Lease or Buy Decision; Product Line Decision; Scarces Resources Decisions. Sales Mix Decisions, Further Processing Decisions.

 

202.06 Budgeting For Planning and Control

i.          Basic Framework of Budgeting; Purposes of Budgeting; Advantages of Budgeting; Planning and Control; The udgeting Process: Budget Committee, Budget Period, Budget Guidelines, Review and Approval. Revision; Authoritative or Participative Budgeting.

 

 

 

ii.         Master Budget:

Master Budget Interrelationships; Sales Forecasts; Production-Related Budgets; Marketing and Administrative Budgets, Cash Budgets; Budgeted Income Statement, Budget Statement of Financial Position.

iii.        Flexible Budget:

            Static Budgets and Flexible Budgets; Limitations of Performance Evaluation with Static Budgets; Preparation of Flexible Budget.

iv.        Additional Consideration in Budgeting:

            Budgeting in Service Industries; Budgeting in Not-for-Profit Organizations; Zero-Base Budgeting; Activity Based Budgeting; Kaizen Budgeting.

v.         Ethical, Behavioral and Implementation Issues in Budgeting:

 

202.07 Profitability Analysis 

Analysis of Profit-Related Variances: Contribution Margin Variance, market Share and Market Size Variances; Profitability of Segments: Profit by Product Line, Divisional Profit; Customer Profitability, Overall profit; Time and Profit: Short-Run Profitability and Long-Run Profitability. 

202.08 Critical thinking skills in a business

 

i.          Reviews a case study and breaks it down into component parts.

ii.         Analyzes elements of the problem from a variety of perspectives.

iii.        Determines the impacts on other aspects of the business.

iv.        Considers a variety of solutions and evaluates the impact of each scenario on key stakeholders.

v.         Reviews relevant cases and literature.

vi.        Recommends solutions based on an integrative view of the best outcome.

 

Text Books

1. Managerial Accounting- R.H. Garrison (10th edition)

2. Cost Accounting- R.S. Polimeni & Others (3rd edition)

Reference Books

1. Cost Management: Hansen and Mowen (4th edition)

2. Cost Management - Blocher, Chen & Lin (1st edition)

3. Cost Accounting, - L. Gayle Rayburn (6th edition)

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