School of Management, Unit Catalogue 2007/08 |
MN20019 Management accounting |
| Credits: 6 |
| Level: Intermediate |
| Semester: 1 |
| Assessment: EX 100% |
| Requisites: |
| Before taking this unit you must take MN10008 |
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Aims: The aim of this unit is to introduce students to a wide range of cost classifications, methods, and analysis, and how these techniques are used in performance evaluation, planning, control, and decision-making. The unit will provide students with the latest practice and issues in management accounting techniques, along with examples/case studies from the real world, applied using the computer technology (excel).
Learning Outcomes: On completion of this unit students should be able to: Part I: Introduction to types of costs: 1. Understand the important and developing role of management accounting in planning, control, and decision-making. 2. Describe and discuss various methods of cost classification and explain to which types of analysis they are most appropriate. For example, absorption costing, marginal costing, direct/indirect as well as variable and fixed cost. Part II: Activity-based costing (ABC): 3. Explain the traditional and activity-based methods of costing output and their information requirements (both in the context of goods and services), and discuss the relative advantages and drawbacks of these methods. 4. Compute, explain, and discuss various methods of cost allocation. For example product costs under a traditional, absorption costing system, volume-based (or throughput-based) product-costing system and activity-based costing system, target costing, Kaizen costing, Benchmarking, Reengineering and the theory of constraints. 5. Understand how ABC leads to an activity-base management (ABM), and the role of management accounting as a cost management system, or a management planning and control system. 6. Identify and eliminate non-value-added costs. 7. Understand the relation between ABM and today's advanced manufacturing environment, for example, Just-In-Time (JTI). Part III: Planning, control, and performance 8. Conduct cost-volume-profit analyses using supplied data and explain the uses and limitations of this technique. 9. Prepare Activity-Based budgeting, flexible budgeting, e-budgeting and variance analysis. 10. Describe and set the operational performance measures appropriate for today's businesses. 11. Calculate financial performance measures such as return on investment (ROI), residual income (RI), and economic value added (EVA), and prepare non-financial measures such as the balanced scorecard, along with the advantage and disadvantages of each of these measures. 12. Understand transfer pricing. Part IIII: Decision-making: 13. Describe and discuss the steps for decision-making, the role of management accounting, how accounting information is used in the decision-making process, and also identify relevant costs and benefits appropriate for it. 14. Discuss target costing and cost analysis for pricing decisions. Skills: Intellectual skills * Identifying relevant (cost) information given a specific problem/objective (T/A); * Interpreting the results of analysis in a manner pertinent to a specified problem/objective (T/A). Professional/Practical skills * Conducting cost-volume-profit analysis and interpreting the results (T/A); * Identifying the optimal output mix with a single resource constraint (T/A); * Constructing cost accounting statements and interpreting them (T/A). * Preparing Master budget, using the computer, and conducting analysis of variance. * Determining the types of information required for management decision-making. * Differentiate between financial and non-financial performance measures, and when to apply them. Transferable/Key skills * Applying a taught method in a range of circumstances or in addressing different issues (F). Personal/Interpersonal skills * Working in teams on specified numerically-based problems (F); * Communication to groups of people (F). Content: Part I: * Review of the nature of product costs and process costs. * Costing terminology and identifying cost behavioour * Historical based cost accounting systems for Job and Process costing * Job and process costing - establishing standard cost systems * Absorption and variable costing systems (including differential income effects) Part II: * Activity-based costing and cost Management systems * Activity-based management and today's advanced manufacturing environment * Noon-value added activities * Costing for JIT systems * Target costing, kaizen costing, Benchmarking, Reengineering, and the theory of constraints Part III: * Activity analysis, cost behaviour, and cost estimation * Cost-volume-profit analysis and relevant costs for decision purposes * Activity-based budgeting, e-budgeting, flexible ad variance analysis * Financial and non-financial performance measures such as return on investment, Economic value added, and the balanced scorecard * Transfer pricing Part III: * Decision-making: relevant costs and benefits * ABC and today's advanced manufacturing environment * Make of buy decision * Major influence on pricing decisions * Target costing. |