Management Accounting

Course Code: ACT 424

Credit Hour: 3

Course Group: Specialization Course: Accounting

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Introduction: purposes of accounting – scorekeeping, attention directing and problem solving; definition, scope and functions of management accounting – management accounting in service and non-profit organizations – cost-benefit and behavioral considerations – management process and accounting; accountant’s position in organization – the management accountant – the controller – the treasurer – the management accounting principles; financial accounting vs. management accounting, cost accounting vs. management accounting – requisites of installation of a management accounting system in an organization; its relationship with economics, mathematics, statistics and taxation – the management accounting profession.

Cost-volume-profit analysis: cost behavior – analysis and measurement of cost behavior – methods of segregating costs into fixed and variable costs ( High and low method, inspection of accounts/account classification method, engineering method, ordinary least-square method) – cost behavior information combined with revenue information in cost-volume-profit (C-V-P) analysis – assumptions an uses of C-V-P analysis – breakeven analysis – computations of breakeven points – application In non –profit entities – C-V-P analysis under multi-product situation – impact of income taxes – what-if analysis.

Costing for decision making: relevant costing: relevant, differential and incremental costs – application for relevant costing – ad hoc decisions – special sales orders – deletion or addition of products or departments – make-or-buy decisions – limiting factor analysis – sell or process further decisions – Irrelevant of future costs – conflicts between decision.

Pricing policy and decisions: Prices and pricing – absorption cost pricing – variable cost pricing – breakeven point pricing – rate of return pricing – target costing and pricing – product life-cycle costing – pricing policies and strategies – pricing in non-profit entities.

Quality management: quality, costs of quality – prevention costs, appraisal costs, internal failure costs, and external failure costs – distribution of quality costs – quality cost reports – uses of quality cost information – international aspects of quality: the ISO standards.

Budgeting and budgetary control: budget, forecast and budgeting – benefits – applicability of budgeting and budgetary control – budgeting process 0 types of budgets and their interrelationship – preparation of functional budgets (Sales, purchase, production, material requirement budgets) – cash budget – master budget – periodic and continuous budgeting – incremental and zero-base budgeting – activity based budgeting – budgetary control and steps therein – objectives of budgetary control – advantages and limitations – budgetary control: an introduction to variance analysis – budget report – role of budgeting in service and not-for-profit organization – behavioral aspects of budgeting.

Flexible budgeting: Flexible budget vs. fixed budget – advantages of flexible budget – flexible budgeting and variable costing – characteristics of a flexible budget – preparation of flexible budget – flexible budget and variance analysis.

Responsibility accounting and financial control: Meaning and objectives of responsibility accounting – financial control – its relationship with operations control – decentralization and responsibility centers – using the controllability principle to evaluate responsibility centers – ROI and RI measures.

Measuring and managing performance: financial performance measurement and no-financial performance measurement, assessing performance over the value chain, the balanced scorecard, motivating behavior in management accounting and control systems.

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Recommended books:

Willianson, Duncan, Cost and Management Accounting (Prentice-Hall)

Reference Books:

Atkinson, Anthony A., Rajiv D. Banker, Robert S. Kaplan and S. Mark Young., Management Accounting,

Charles T. Horgren and Gary L. Sundem: Introduction to Management Accounting

Garrison, R. A. and E. W Noreen, Managerial Accounting (Irwin and McGraw-Hill)