MANAGEMENT ACCOUNTING 1 (ACCT 221)

Management information

1. Describe the purpose of management information: planning, control and decision making (CK1)
2. Describe the features  and sources of useful management information (CK1)
3. Identify qualities of good information(CK1)

Management information (continued)

1. Explain the roles of the trainee accountant (CK1)
2. Discuss the different types of coding systems and its purpose (CK1)

The role of information technology

1. Explain the role of information technology in management information (CK1)
2. Identify the advantages and disadvantages of a computerized accounting system over a manual one. (CK1)

Cost classification

1. Describe the variety of cost classifications used for different purposes in a cost accounting system, including by responsibility, function, direct/indirect, behavior. (CC1)
2. Distinguish between direct and indirect labour costs (CC1)

Cost classification (continued)

1. Apply cost classification in calculating total cost of one unit of product

Cost behavior

1. Explain and illustrate the nature of variable, fixed and mixed costs (CC1)
2. Use the high –low method to separate semi-variable costs(CC1)
3. Analyse the effect of changing activity levels on unit costs (CC1)

Information for Comparisons

1. Explain the purpose and basis of making comparisons (CK1)
2. Explain the forecasting/budgeting process and the concept of feed forward and feedback control. (CK1)
3. Explain and illustrate the concept of flexible budgets (CK1)

Information for Comparisons (continued)

1. Calculate sales variances between actual and historical/forecast data which may or may not be adjusted for volume change (CK1, CIP1)
2. Identify possible causes of variances and identify whether variances are favourable or adverse (CK1, CIP1)

Information for Comparisons (continued)

1. Calculate cost variances between actual and historical/forecast data which may or may not be adjusted for volume change (CK1, CIP1)
2. Identify possible causes of variances and identify whether variances are favourable or adverse (CK1, CIP1)
3. Explain the concept of exception reporting and factors affecting the decision whether to investigate variance. (CK1, CIP1)

Reporting Management Information

1. Identify suitable formats for the presentation of management information according to purpose (CK1)
2. Describe methods of analyzing, presenting and communicating information (CK1)
3. Identify factors to consider in choosing a communication method(CK1)

Reporting Management Information (continued)

1. Identify suitable formats for communicating management information according to purpose and organisational guidelines including: informal business reports, letter and email or memo. (CK1, CIP1)
2. Identify the general principles of distributing reports (eg procedures, timing, recipients) including the reporting of confidential information (CK1, CIP1)
3. Interpret information presented in management reports (CK1, CIP1)

Materials (Part 1)

1. Describe the main types of material classification (CK1, CIP1)
2. Describe the procedures and documentation required to ensure the correct authorization, coding, analysis and recording of direct and indirect material costs (CK1, CIP1)

Materials (Part 1) (continued)

1. Explain, illustrate and evaluate the FIFO, LIFO and periodic and cumulative weighted average methods used to price materials issued from inventory (CCIT1)
2. Calculate material input requirements, and control measures, where wastage occurs (CCIT1)

Materials (Part 2)

1. Describe the procedures required to monitor inventory and to minimize discrepancies and losses (CCIT1)
2. Explain and illustrate the costs of holding inventory and of being without inventory (CCIT1)
3. Explain, illustrate and evaluate inventory control levels (minimum, maximum, reorder) (CCIT1)

Materials (Part 2) (continued)

1. Calculate EOQ and interpret optimal order quantities (CCIT1)
2. Explain the relationship between the materials costing system and the inventory control system(CCIT1)

Labour

1. Explain, illustrate and evaluate labour remuneration methods (CCIT1, CIP1)
2. Describe the operation of a payroll accounting system (CCIT1; CIP1)

Labour (continued)

1. Distinguish and illustrate accounting for direct and indirect labour costs (CCIT1)
2. Explain the causes and costs of labour Calculate, labour turnover(CCIT1)

Labour (continued)

1. Describe and illustrate measures of labour efficiency and utilization (CCIT1)
2. Calculate labour ratios and idle time ratios (CCIT1)

Expenses

1. Describe the nature of expenses by function (CCIT1)
2. Describe the procedures to ensure the correct authorization, coding, analysis and recording of direct and indirect expenses (CCIT1)
3. Describe and calculate capital and revenue expenditure and the relevant accounting treatment (CCIT1)

Expenses (continued)

1. Calculate and explain depreciation charges using straight-line, reducing balance, machine hour and product units methods (CCIT1)
2. Explain the relationship between the expenses costing system and the expense accounting system (CCIT1)

Overheads and absorption costing

1. 1. Explain the rationale for absorption costing (CC1)
   2. Describe the process of allocating, apportioning and absorbing production overheads to establish product costs (CC1)
   3. Explain and demonstrate the bases of cost apportionment (CC1)

Overheads and absorption costing (continued)

1. Explain and demonstrate cost reapportionment using direct method and step-down method (CC1)

Overheads and absorption costing (continued)

1.   Describe and illustrate the  accounting for production overhead costs, including the analysis and interpretation of over/under absorption (CC1)
2. 2. Calculate product costs using the absorption costing method (CC1)

Marginal costing and absorption costing

1. Explain and illustrate the concept of contribution (CC1)
2. Compare  and contrast the use of absorption and marginal costing profit reporting and inventory valuation (CC1)

Marginal costing and absorption costing

1. Reconcile the profits reported by absorption and marginal costing (CC1)
2. Explain the usefulness of profit and contribution information respectively (CC1)

Cost bookkeeping

1. Explain the relationship between the cost/management accounting system and the financial accounting/management information systems (CK1; CIP1)
2. Describe and illustrate the accounting for material costs (CCIT1; CIP1)
3. Describe and illustrate the accounting for labour costs (CCIT1; CIP1)
4. Describe and illustrate the accounting for production overhead costs (CCIT1; CIP1)

Job, batch and service costing

1. Identify situations where the use of job or batch costing is appropriate. (CC1; CIP1)
2. Calculate unit costs in job and batch costing (CC1; CIP1)
3. Apply cost plus pricing in job costing (CC1; CIP1)

Job, batch and service costing (continued)

1. Describe characteristics of service costing (CC1)
2. Identify situations where the use of service costing is appropriate. (CC1)
3. Calculate service unit costs (CC1)

Process Costing – Part 1

1. Identify situations where the use of process costing is appropriate(CC1)

Process Costing – Part 1 (continnued)

1. Explain and illustrate the nature of normal and abnormal losses/gains(CC1)

Process Costing – Part 2

1. Distinguish between joint products and by products(CC1; CIP1)
2. Explain the accounting treatment of joint products and by products at the point of separation(CC1; CIP1)
3. Apportion joint process costs using net realisable values and weight/volume of output respectively (CC1; CIP1)

Cost-Volume-Profit Analysis (CVP)

1. Calculate contribution per unit and the contribution/sales ratio to calculate break-even point and margin of safety(CC1; CIP1)
2. Explain the concept of breakeven and margin of safety(CC1; CIP1)
3. Analyse the effect on breakeven point and margin of safety of changes in selling price and costs (CC1; CIP1)

Cost-Volume-Profit Analysis (CVP) (continued)

1. Use contribution per unit and contribution/sales ratio to calculate the sales required to achieve a target profit (CC1)
2. Interpret breakeven and profit/volume charts for a single product or business (CC1)

Short-term decisions (Part 1)

1. Explain the concept of relevant costs(CCIT2)
2. Apply the concept of relevant costs in business situations (CCIT2)
3. Explain the importance of the limiting factor concept(CCIT2)
4. Identify the limiting factor in given situations(CCIT2)

Short-term decisions (Part 2)

1. Formulate and determine the optimal production solution when there is a single resource constraint(CCIT2)

Short-term decisions (Part 3)

1. Solve make/buy-in problems when there is a single resource constraint (CCIT2)

Capital investment appraisal – Part 1

1. Explain and illustrate the difference between simple and compound interest and between nominal and effective interest rates(CC1)
2. Explain and illustrate compounding and discounting (CC1)
3. Calculate present value using annuity and perpetuity formulas(CCIT2)

Capital investment appraisal – Part 2 (continued)

1. Explain the distinction between cash flow and profit and the relevance of cash flow to capital investment appraisal(CCIT2)
2. Explain and illustrate the net present value (NPV) and internal rate of return (IRR) methods of discounted cash flow(CCIT2)
3. Interpret the results of NPV and IRR of a viable investment (CCIT2)

Capital investment appraisal – Part 3

1. Calculate payback (discounted and non-discounted) (CCIT2)
2. Interpret the results of payback calculations of a viable investment  (CCIT2)

Cash and Cash flows

1. Define cash and cash flow and identify the various sources of cash receipts and payments (including regular/exceptional revenue/capital receipts and payments, and drawings) (CK2)
2. Distinguish between the cash flow pattern of different types of organisations (CK2)

Cash and Cash flows (continued)

1. Describe the relationship between cash flow accounting and accruals accounting(CK2)
2. Explain the importance of cash flow management and its impact on liquidity and company survival(CK2)

Cash and treasury management

1. Describe the basic treasury functions(CK2)
2. Describe and illustrate cash handling procedures (CK2)

Cash and treasury management (continued)

1. Describe the trends in the economic and financial environment can affect management of cash balances (CK2)

Forecasting cash flows (Part 1)

1. Explain the objectives of forecast and cash budgeting (CK2; CIP1)
2. Prepare a cash budget/forecast (CC2)

Forecasting cash flows (Part 2)  

1. Explain and illustrate how a cash budget can be used as a mechanism for monitoring and control (CK2)
2. Cash budgeting with inflation (CC2)

Forecasting cash flows (Part 2) (continued)

1. Explain and illustrate statistical techniques used in cash forecasting including moving averages and allowance for inflation (CC2)

Investing surplus funds

1. Discuss the guidelines and legislation in relation to the management of cash balances in public sector organisations (CK3; CIP1)
2. Explain how surplus cash and cash deficit may arise(CK3; CIP1)
3. Explain the short term investments in bank deposits and money-market deposits and the associated risks/returns(CK3; CIP1)
4. Explain the short term investments in certificates of deposits, government stock, local authority stock and the associated risks/returns(CK3)

Raising finance from a bank

1. Explain different ways of raising finance from a bank (CK3)
2. Explain the basic terms and conditions associated with each financing(CK3)
3. Describe the bank’s lending criteria (CK3)