SYLLABI – PART C (Professional Programme I)
COST AND MANAGEMENT ACCOUNTING
1. AIM
The aim of this module is to instil the knowledge, key skills and competencies necessary to act in a Cost
and Management Accounting function.
2. LEARNING OUTCOMES
At the conclusion of this module the candidate will be able to.
Understand the framework of Cost and Management Accounting.
Perform cost accounting functions using the various costing methods.
Advise Management on business decisions based on cost and management accounting concepts.
Analyse the cost accounts and use variance analysis to guide decision making.
Develop suitable costing systems for the organization.
3. PRE-REQUISITE LEARNING
Evidence of assessed pre-requisite knowledge and understanding in the following disciplines must be
demonstrated through the Institute’s examinations, or those of equivalent qualifications which have been
approved as meeting the Institute’s qualifications.
All of Part A
Taxation
Financial Accounting
4. LEARNING CONTENT
4.1. Distinction between cost accounting, management accounting and financial accounting.
4.2. Elements of cost
Their nature and classification. Cost centres and cost units.
Relationship between costs and financial accounts. Double entry theory applied to cost accounting
records, interlocking and integral accounts.
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4.3. Classification of materials
Purchasing stores. Basic controls applied to purchasing (including economic order quantity), pricing of
stores issues and inventory valuation, valuation of work in progress.
4.4. Quality and Control
Just In Time Purchasing and Manufacturing
Total Quality Management
4.5. Remuneration
Principles of wages control including the learning curve and payroll routine.
4.6. Overheads
Analysis and classification of overhead expenses, their apportionment to cost centres and absorption into
cost units. Activity based approaches to Cost Analysis.
4.7. Product costing
Principles applied to job, process and service type industries.
Conversion cost and accounting for material losses
Problems of common cost
Joint products, by products
Activity based costing – use of cost drivers and activities
4.8. Budgetary Control
Objectives of budgetary control, evaluation of budget systems
Al types of budgets including:
Fixed and flexible budgets, cash flow budgets, use of variances,
Quantitative aids to budgeting, use of computer based models,
Behavioural implications of budgeting and budgetary control.
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4.9. Marginal costing
Theory and practice. Contribution concept.
Break even analysis. Profit/volume ratios. Margin of safety. Profit graphs.
Relevant costs, limiting factors, including problems requiring elementary linear programming solutions,
decisions about alternatives, such as make or buy, and shutdown.
4.10. Standard costing
Types of standards – (basic, normal, current, expected and ideal standards)
Setting standards, Variance analysis, two, three and four variance analysis, treatment and utilization of
variances.
Significance and relevance of variances, planning and operational variances. Behavioural of implications.
Patterns of cost behaviour
Influence of volume of activity
The preparation of profit reconciliation statements using either standard marginal costing or absorption
costing principles.
4.11. Divisional Performance Evaluation
Functional and divisionalised organizational structure
Profit centres and investment centres
Advantages and disadvantages of divisionalization
Return on Investment
Residual Income
Transfer pricing in divisionalized companies – transfer pricing manipulation and tax havens.
4.12. Decision Theory
Decision making under:- Risk, uncertainty, centainty
Probability distributions and expected value
Network Analysis / Critical Path Method (CPM)
Project Evaluation and Review Techniques (PERT)
Cost reduction schemes
Back flush accounting
Through put Accounting
Decision Tree Analysis
Use of cost information for pricing decisions under conditions of uncertainty
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4.13. Quantitative Techniques in Management Accounting
(Statistical replacement methods i.e. vehicle replacements, other replacements, inventory control
models, transportation models).
4.14. Presentation of Information to Management
Operating statements, variance reports, ratios, inter-firm and inter-divisional or departmental comparisons
using such methods as tables and graphs.
* In addition, candidates will be expected to make comments concerning the non-quantitative
aspects of the decision being made. Candidates may also be required to use knowledge gained in
other subjects of the course.
NOTE:
Candidates may make use of hand-held, self-powered, silent, non-programmable calculators but
intermediate working steps must be shown
5. ASSESSMENT SCHEME
Three hour examination paper
6. RECOMMENDED READING
Lucey T (2004) Costing 6th Edition Bookpower London
Drury C (2004) Management and Cost Thompson Learning London
Accounting (6th Edition)
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