MANAGEMENT ACCOUNTING 2 (ACCT 321)

Introduction
Accounting for Management

1. Describe the purpose and role of cost and management accounting within an organization. (CK1)
2. Compare and contrast financial accounting with cost and management accounting. (CK1)

Accounting for Management (continued)

1. Identify and explain the attributes of good information. (CK1)
2. Explain the limitations of management information in providing guidance for managerial decision-making.  (CK1)

Sources of data and analysis data

1. Describe sources of information from within and outside the organization (including government statistics, financial press, professional or trade associations, quotations, and price lists). (CK1)
2. Explain the uses and limitations of published information/data (including information from the internet). (CK1)

Sources of data and analysis data (Cont.)

1. Describe the impact of the general economic environment on costs/revenues. (CK1)
2. Explain sampling techniques (random, systematic, stratified, multistage, cluster, and quota). (CK1)

Sources of data and analysis data (Cont.)

1. Choose an appropriate sampling method in a specific situation. (CK1

Presenting Information

1. Prepare written reports representing management information in suitable formats according to purpose. (CCIT1)
2. Present information using tables, charts, and graphs (bar charts, line graphs, pie charts, and scatter graphs). (CCIT1)
3. Interpret information (including tables, charts, and graphs) presented in management reports. (CCIT1)

Lecture
Class Activity with MCQs

Reading: Chapter  3

Cost Classification

1. Explain and illustrate production and non-production costs. (CC1)
2. Describe the different elements of non-production costs – administrative, selling, distribution, and finance. (CC1)
3. Describe the different elements of production costs – materials, labor, and overheads. (CC1)
4.  

Lecture
Class Activities with Problem
Solving Questions

Reading: Chapter  4

Cost Classification (continued)

1. Explain and illustrate with examples classifications used in the analysis of the product/service costs including by function, direct and indirect, fixed and variable, stepped fixed and semi-variable costs.  (CC1)
2. Explain and illustrate the concept of cost objects, cost units and cost centres. (CC1)
3. Describe the differing needs for information of cost, profit , investment and revenue centre manager. (CC1)

Cost Classification (continued)

1. Explain and illustrate with examples classifications used in the analysis of the product/service costs, including by function, direct and indirect, fixed and variable, stepped fixed and semi-variable costs. (CC1)
2. Describe and illustrate graphically different types of cost behavior.  (CC1)

Lecture
Group activity on costs classification.

Reading: Chapter 4

Cost Classification (continued)

1. Use high-low analysis to separate the fixed and variable elements of total costs, including situations involving semi-variable and stepped fixed costs and changes in the variable cost per unit.  (CC1)
2. Explain the structure of linear functions and equations. (CC1)

Lecture
Quiz on Chapters 3 a & b (MCQs)

Reading: Chapter  4

Accounting for Materials

1. Describe the different procedures and documents necessary for the ordering, receiving, and issuing of materials from the inventory. (CC1)
2. Interpret the entries and balances in the material inventory account. (CC1)

Lecture
Class activities using sample questions.

Reading: Chapter  5

Accounting for Materials (continued)

1. Produce calculations to minimize inventory costs when inventory is gradually replenished. (CC1)
2. Describe and apply appropriate methods for establishing reorder levels where demand in the lead time is constant. (CC1)
3. Calculate the value of closing inventory and material issues using LIFO, FIFO, and average methods. (CC1)

Lecture
Class activities using sample questions
Quiz on Chapter 5

Reading: Chapter  5

Accounting for Labour

1. Calculate direct and indirect costs of labor. (CC1)
2. Explain the methods used to relate input labor costs to work done. (CC1)
3. Prepare the journal and ledger entries to record labor cost inputs and outputs. (CC1)

Lecture
Class activities using sample questions

Reading: Chapter  6

Accounting for Labour (continued)

1. Calculate the level, and analyze the costs and causes, of labor turnover. (CC1)
2. Explain and calculate labor efficiency, capacity and production volume ratios. (CC1)

Lecture
Class activities using sample questions
Quiz on Chapter 6

Reading: Chapter  6

Accounting for Overheads

1. Describe the procedures involved in determining production overhead absorption rates. (CC1)
2. Allocate and apportion production overheads to cost centre using an appropriate basis. (CC1)
3. Reapportion service cost centre costs to production cost centres (using reciprocal method where service cost centres work for each other). (CC1)

Lecture
Class activities using sample questions

Reading: Chapter  7

Accounting for Overheads (continued)

1. Select, apply, and discuss appropriate bases for absorption rates. (CC1)
2. Prepare journal and ledger entries for manufacturing overheads incurred and absorbed. (CC1)
3. Calculate and explain the under and over-absorption of overheads. (CC1)

Lecture
Class activities using sample questions
Quiz on Chapter 7

Reading: Chapter  7

Absorption and Marginal Costing

1. Explain the importance of, and apply, the concept of contribution. (CC1)
2. Demonstrate and discuss the effect of absorption and marginal costing on inventory valuation and profit determination. (CC1)
3. Calculate profit and loss under absorption and marginal costing. (CC1)

Lecture
Class activities using sample questions
Group work on research on P/L using absorption and marginal costing.

Reading: Chapter  8

Absorption and Marginal Costing (continued)

1. Reconcile the profits or losses calculated under absorption and marginal costing. (CC1)
2. Describe the advantages and disadvantages of absorption and marginal costing. (CC1)

Lecture
Class activities using sample questions
Quiz on Chapter 8

Reading: Chapter  8

Job, Batch and Service Costing

1. Describe the characteristics of job and batch costing. (CC1)
2. Describe the situations where the use of job or batch costing would be appropriate. (CC1)
3. Prepare cost records and accounts in job and batch costing situations. (CC1)

Lecture
Class activities using sample questions

Reading: Chapter  9

Job, Batch and Service Costing (continued)

1. Identify situations where the use of service/operation costing is appropriate. (CC1)
2. Illustrate suitable unit cost measures that may be used in different service/operation situations. (CC1)
3. Carry out service cost analysis in simple service industry situations. (CC1)

Lecture
Quiz on Chapter 9

Reading: Chapter  9

Process Costing

1. Describe the characteristics of process costing. (CC1)
2. Describe the situations where the use of process costing would be appropriate. (CC1)
3. Prepare process accounts, involving normal and abnormal losses and abnormal gains. (CC1)

Lecture
Class Activities using sample questions

Reading: Chapter  9

Process Costing (continued)

1. Prepare process accounts in situations where work remains incomplete. (CC1)
2. Prepare process accounts where losses and gains are identified at different stages of the process. (CC1)
3. Distinguish between by-products and joint products. (CC1)
4. Prepare process accounts in situations where by-products and/or joint products occur. (CC1)

Lecture
Class Activities using sample questions
Quiz on Chapter 9

Reading: Chapter  9

Service and operation costing

1. Identify situations where the use of service/operating costing is appropriate (CC1)

Lecture
Class Activities using sample questions

Reading: Chapter  10

Service and operation costing (continued)

1. Illustrate suitable unit cost measures that may be used in different service/operation situations (CC1)
2. Carry out service cost analysis in simple service industry situations (CC1)

Lecture
Class Activities using sample questions
Quiz on Chapter 10

Reading: Chapter 10

Alternative Costing principles

1. Explain activity-based costing (ABC), target costing, life cycle costing, and total quality management (TQM) as alternative cost management techniques. (CC2)
2. Differentiate ABC, target costing, and life cycle costing from the traditional costing techniques (calculations are not required). (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter  11

Forecasting

1. Explain the advantages and disadvantages of using the high-low method to estimate the fixed and variable elements of costing. (CC2)
2. Construct scatter diagrams and lines of best fit. (CC2)
3. Explain the advantages and disadvantages of linear regression analysis. (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter  12

Forecasting (continued)

1. Explain the principles of time series analysis (Cyclical, trend, seasonal variation, and random elements). (CC2)
2. Calculation of trend, including the use of regression coefficients. (CC2)
3. Calculate simple index numbers for one or more variables. (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter  12

Budgeting

1. Explain why organizations use budgeting. (CC2)
2. Describe the planning and control cycle in an organization. (CC2)
3. Explain and illustrate ‘what if’ analysis and scenario planning. (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter  13

Budgeting

1. Explain the importance of flexible budgets in control. (CC2)
2. Explain the disadvantages of fixed budgets in control. (CC2)
3. Identify situations where fixed or flexible budgetary control would be appropriate. (CC2)

Lecture
Class Activities using sample questions
Quiz on Chapter 13

Reading: Chapter 13

Budgeting

1. Explain the administrative procedures in the budgeting process. (CC2)
2. Describe the stages in the budgeting process (includes relevant data, planning and agreeing on draft budgets, and the purpose of forecasts and how they link to budgeting.) (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter 13

Budgeting

1. Prepare functional budgets (production, raw materials usage, and purchases, labor, variable, and fixed overheads.) (CC3)
2. Prepare cash budgets. (CC2)
3. Prepare master budgets (statement of profit or loss and statement of financial position). (CC3)

Lecture
Class Activities using sample questions

Reading: Chapter 13

Budgeting

1. Explain the importance of motivation in performance management. (CC2)
2. Identify factors in a budgetary planning and control system that influence motivation (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter 13

Budgeting

1. Discuss the advantages and disadvantages of a participative approach to budgeting. (CC2)
2. Explain top-down, and bottom-up approaches to budgeting. (CC2)

Lecture
Class Activities using sample questions
Quiz on Chapter 13

Reading: Chapter 13

Capital Budgeting

1. Discuss the importance of capital investment planning and control. (CC2)
2. Define and distinguish between capital and revenue expenditure. (CC2)
3. Outline the issues to consider and the steps involved in the preparation of a capital expenditure budget.(CC2)

Lecture
Class Activities using sample questions

Reading: Chapter 14

Capital Budgeting

1. Explain and illustrate the difference between simple and compound interest, and between nominal and effective interest rates. (CC2)
2. Explain and illustrate compounding and discounting. (CC2)
3. Explain the distinction between cash flow and profit and the relevance of cash flow to capital investment appraisal. (CC2)
4. Identify and evaluate relevant cash flows for individual investment decisions. (CC2)
5. Explain and illustrate the net present value (NPV) and internal rate of return (IRR) methods of discounted cash flow. (CC4)

Lecture
Class Activities using sample questions

Reading: Chapter 14

Capital Budgeting (continued)

1. Calculate present value using annuity and perpetuity formulate. (CC4)
2. Calculate NPV, IRR, and payback (discounted and non discounted) (CC4)
3. Interpret the results of NPV, IRR, and payback calculates of investment viability. (CC4)

Lecture
Class Activities using sample questions
Quiz on Chapter 14

Reading: Chapter 14

Standard Costing

1. Explain the purpose and principles of standard costing. (CC3)
2. Explain and illustrate the difference between standard, marginal and absorption costing. (CC1)
3. Establish the standard cost per unit under absorption and marginal costing.(CC1)

Lecture
Class Activities using sample questions

Reading: Chapter 15

Standard Costing 

1.  Variance Calculations and Analysis
2. Calculate materials total, price, and usage variance. (CC3)
3. Calculate labor total, rate, and efficiency variance. (CC3)
4. Calculate variance overhead total, expenditure and efficiency.(CC3)

Lecture
Class Activities using sample questions

Reading: Chapter 15

Standard Costing
Budgetary control and reporting

1. Calculate sample variances between flexed budget, fixed budget and actual sales, costs and profits. (CC3)
2. Discuss the relative significance of variance. (CC3)
3. Explain potential action to eliminate variances. (CC3)

Lecture
Class Activities using sample questions

Reading: Chapter 15

Standard Costing

1. Reconcile budget profit with actual profit under standard absorption costing. (CC1)
2. Reconcile budgeted profit or contribution with actual profit or contribution under standard marginal costing. (CC1)

Lecture
Class Activities using sample questions

Reading: Chapter 15

Performance Measurement

1. Discuss the purpose of mission statements and their role in performance measurement. (CC2)
2. Discuss the purpose of strategic and operational and tactical objectives and their role in performance measurement. (CC2)
3. Discuss the impact of economic and market conditions on performance measurement. (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter 16

Performance Measurement

1. Establish critical success factors and key performance indicators in a specific situation. (CC2)
2. Discuss the role of benchmarking in performance measurement. (C2)
3. Discuss and calculate measures if financial performance (profitability, liquidity, activity and gearing) and non-financial measures. (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter  16

Performance Measurement

1. Describe performance indicator for financial success., customer satisfaction, process efficiency  and growth. (CC2)
2. Explain the concepts of economy, efficiency and effectiveness. (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter 16

Performance Measurement

1. Describe performance measures which would be suitable in contract and process costing environments. (CC2)
2. Describe measures of performance   utilisation in service and manufacturing environments. (CC2)

Lecture
Class Activities using sample questions

Reading: Chapter 16

Spreadsheets

1. Explain the role, features and uses of a spreadsheet package. (CCIT1)

Lecture
Class Activities using sample questions

Reading: Chapter 17

Spreadsheets

1. Identify applications for computer spreadsheets and their use in cost management (CCIT1)

Lecture
Class Activities using sample questions

Reading: Chapter 17

Guest Lecture

1. Budgeted planning
2. Financial and nonfinancial performance measurement