KASNEB CPA Advanced Management Accounting Revision Kits

Description

KASNEB CPA Advanced Management Accounting Revision Kits

GENERAL OBJECTIVES
This paper is intended to equip the candidate with knowledge, skills and attitudes that will enable him/her
to apply advanced management accounting techniques in business decision making
14.0 LEARNING OUTCOMES
A candidate who passes this paper should be able to:
 Use cost estimation data in decision making
 Apply inventory management techniques to decision making
 Use financial and non-financial indicators to measure organizational performance
 Apply environmental management accounting concepts in practice
CONCEPT
14.1 Nature of management accounting
– Value of information in decision making; perfect and imperfect information
– Ethical standards of management accountants
14.2 cost estimation and forecasting
– An overview of the methods of cost estimation and prediction; engineering, simulation and
statistical methods, simple and multiple regressions, the statistical properties of regression
– Learning curve and its application
14.3 short-term planning and decision-making
– Overview of single product and multiple product cost-volume-profit analysis under conditions of
uncertainty
– single product and multiple product cost-volume –profit analysis under conditions of uncertainty
– risk assessment
– application of marginal costing: product mix decisions, special orders, make or buy decision,
pricing decision and other similar short-run decisions, relevant information in decision making
14.4 budgetary control and advanced variance analysis
– flexible and static budget, purpose of budgetary control; operation of a budgetary control system,
organization and and coordination of the budgeting function
– human aspects (motivational aspects) of budgeting, emerging trends in budgetary control; ERPS,
ABB,ZBB, program budgeting
– advanced variance analysis and performance evaluation; expost variances and opportunity costs in
variances
– variance investigation models
14.5 inventory control decisions
– cost of holding and ordering inventory
– stochastic inventory models
– inventory model for perishable items
– application of simulation models in inventory control
14.6 decision theory
– Decision process
– Decision making environment- certainity, risk, uncertainity and competition
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– Decision making under uncertainity-maxmin, maxmax, minimax regret, Hurwicz decision rule,
Laplace decision rule
– Decision making under risk-expected monetary value, expected opportunity loss, minimizing risk
using coefficient of variation, expected value of perfect information
– Decision trees-sequential decision, expected value of sample information
– Limitations of expected monetary value criteria
– Game theory-non zero sum, two persons zero sum games, dominance, value of the game, saddle
point, mixed strategies
– Limitations of game theory
14.7 performance measurement and evaluation
– Linkage between performance measurement and organizational vision
– Responsibility accounting and responsibility centres, segmented reporting
– Distinction between financial performance measures and non financial performance measures
– Cost of information
– Methods of evaluating responsibility centre performance such as return on investment (ROI) and
residual income (RI) and economic value added (EVA) (importance and limitations of the
methods)
– Other financial/non-financial performance measures: balance score card, performance pyramid,
Fitgerald and Moon’s building block model, performance prism
– Managerial incentives schemes
– Performance contracting
– Performance measures in the service industry
14.8 Pricing decisions
– External pricing methods
– Internal pricing methods (transfer pricing)
– Backflush accounting
– Throughput costing
– Target costing
– Life cycle costing
14.9 Environmental management accounting
– Role of accountants in environmental management accounting
– Using environmental accounting to manage costs
– Opportunities for environmental awareness in management accounting
14.10 Emerging issues and trends