Description

Advanced Management Accounting

Advanced Management Accounting is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her to apply advanced management accounting tools and techniques for decision making in the context of organisational strategy.

LEARNING OUTCOMES

A candidate who passes this paper should be able to:

• Use cost estimation data in decision making
• Apply advanced management accounting techniques to aid in organisational strategic decision making
• Use financial and non-financial indicators to measure organisational performance
• Apply environmental management accounting concepts in

CONTENT

1. Strategic management accounting information
   • Sources of strategic management accounting information
   • Role of strategic management accounting in strategic planning and control
   • Governance and control of strategic management accounting information
   • Scope and limitations of management accounting
   • Ethical standards for management accountants

2.                  Cost estimation and interpretation

• Ordinary least square (OLS) method. Single and multiple predictors; tests of significance (goodness of fit, ANOVA/P-Value, economic plausibility tests, significance of independent variable/t-test)
• Specifications/assumptions of OLS (implications of serial correlation, multi- colinearity)
• Computer output and technical versus managerial interpretation of OLS results
• Learning curve models and their application

3.                  Planning and decision making techniques

• Cost volume profit analysis (CVP) for single and multiple products under conditions of uncertainty
• Decision making under environments of uncertainty and risk, using conditional payoff tables and decision
• Expected value of perfect information
• Relevant cost analysis
• Application of marginal costing (Non-routine decisions): Limiting factor analysis,
• Throughput accounting, make or buy decision, continue or discontinue/drop decisions, special order decisions and other short term

4.                 Pricing decisions

• External pricing methods
• Transfer pricing in divisionalised companies: Domestic and international transfer pricing
• Product life cycle costing, Target costing and Kaizen costing

5.                   Strategic performance measurement

• Functional and divisionalised organisational structures
• Responsibility accounting, responsibility centers and segmental reporting
• Divisional performance measures such as profit margin, asset turnover, return on investment(ROI), return on capital employed(ROCE), residual income(RI), accounting rate of return(ARR) and economic value added(EVA)
• Non-financial performance indicators
• Alternative performance measures such as balanced scorecard, performance pyramid, Fitzgerald and Moon’s building block

6.                   Inventory control decisions

• Applications of certainty inventory models (EOQ and EBQ) in decision making
• Stochastic inventory models with and without stock out cost
• Marginal analysis for perishable stock items
• Application of simulation models in inventory control (with and without backorders)
• Application of strategic management decisions in inventory control: Just-in-time purchasing (JIT), ABC analysis and material requirement planning(MRP)

7.                   Budgetary control techniques

• Applications of budgetary control systems: Top-down, bottom-up, rolling, zero- based(ZBB), activity-based (ABB), incremental, feedback and feed-forward controls.
• Use of operational variances in reconciling original budget with actual performance
• Advanced variance analysis, planning and operational analysis (Ex-post)
• Application of learning curve model and ABC in variance analysis
• Investigation models for

8.                   Environmental management accounting

• Role of accountants in managing and accounting for environmental cost
• Use of management accounting techniques in identification and allocation of environmental costs (Inflow/Outflow analysis, Flow cost accounting, Environmental lifecycle costing and Environmental Activity Based Costing).