Paper 11: Management Accounting

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About Course

The Professional courses are administered at Foundation, Intermediate and Advanced Levels. Each level requires an average of one year, though candidates are advised to provide for an additional one year to meet requirements for internship/ practical experience.

A student must book for a minimum of three papers in a level in any order unless is exempted or has credits.

Prior to certification, candidates will be required to:

  • Attend workshops on ethics, soft skills and emerging issues organised by kasneb and ICPAK and earn IPD hours.
  • Obtain 1-Year practical experience, or alternatively attend workshops on work based simulation organised by kasneb and ICPAK.

This course is aimed at persons who wish to qualify and work or practice as professional accountants, auditors, finance managers, tax managers and consultants in related areas in both public and private sectors.

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Course Content

Overview

1. The context of management accounting:
1.1 Definition and scope of Cost and Management accounting 1.2 Role of Management Accounting in decision making 1.3 Users of Management accounting information 1.4 Cost accounting as a subset of management accounting 1.5 Management accounting and financial accounting 1.6 Difference between management accounting and financial accounting 1.7 Relationship between Management accountant and other managers 1.8 Limitations of management accounting

2. Costing terms and concepts
2.1 Cost definition and identification 2.2 Cost classification 2.3 Cost classification bases; by time; by behaviour; by function; identification with stock; by relevance for decision making; by management control 2.4 Types of cost systems 2.5 Maintaining a cost database

3. Introduction to cost estimation
3.1 Non-mathematical methods 3.1.1 Accounts Analysis method 3.1.2 High-Low method 3.1.3 Industrial Engineering method 3.2 Mathematical methods 3.2.1 Scatter graph method 3.2.2 Ordinary Least Square method (simple regression only)

4. Cost accumulation

5. Activity based costing
5.1 Meaning of activity-based costing 5.2 Distinction between activity-based costing and the Traditional absorption costing 5.3 Classification of cost drivers 5.4 The hierarchy of cost drivers 5.5 Overhead absorption rates - ABC 5.6 Income statements - one unit 5.7 Income statement - total output/sales

6. Product costing methods
6.1 Introduction to costing methods 6.2 Specific order costing; Job order costing; Batch costing 6.3 Continuous operation costing; Process costing (normal process losses; abnormal process losses/gains); treatment of closing work in progress; treatment of opening work in progress (FIFO and Weighted Average cost methods); Process costing for joint products and by-products; distinction between joint-products and by-products 6.4 Service costing

6. Product costing methods
6.1 Introduction to costing methods 6.2 Specific order costing; Job order costing; Batch costing 6.3 Continuous operation costing; Process costing (normal process losses; abnormal process losses/gains); treatment of closing work in progress; treatment of opening work in progress (FIFO and Weighted Average cost methods); Process costing for joint products and by-products; distinction between joint-products and by-products 6.4 Service costing

7. Marginal and absorption costing
7.1 Differences between marginal costing and absorption costing 7.2 comparative income statements 7.3 Arguments for the use of marginal costing 7.4 Arguments for the use of absorption costing 7.5 Reconciliation statement

8. Cost-volume profit analysis (break-even analysis)
8.1 Introduction to C-V-P analysis 8.2 Assumptions of C-V-P analysis 8.3 Break-even chart 8.4 Profit-volume chart 8.5 Single product C-V-P analysis 8.6 Multiple product C-V-P analysis 8.7 Limitations of C-V-P Analysis 8.8 Applications of marginal costing in decision making (make/buy decisions; discontinue a product; choice of a product where limiting factor exists; acceptance of a special offer); overriding considerations to the above decisions

9. Budgetary control
9.1 Introduction to budgets 9.1.1 Essential features of a budget 9.1.2 Objectives of budgetary control 9.1.3 Difference between forecasts and budgets 9.2 Types of budgets 9.2.1 Classification based on time (long-term budgets, short-term budgets and current budgets) 9.2.2 Classification based on functions (functional/subsidiary budgets, master budgets) 9.2.3 Classification based on capacity (fixed budgets, flexible budgets) 9.3 Preparation of budgets 9.3.1 Functional budgets including cash budget and master budget 9.3.2 Fixed and flexible budgets

10. Standard costing and variance analysis
10.1 Introduction 10.1.1 Types of standards (basic standards, ideal standards, attainable standards) 10.1.2 Advantages and disadvantages of standard costing 10.2 Variance analysis 10.2.1 Material cost variances (usage variance, price variance) 10.2.2 Labour cost variances (efficiency variance, rate variance) 10.2.3 Variable overhead variances (expenditure variance, efficiency variance) 10.2.4 Fixed overhead variances (expenditure variance, capacity variance, efficiency variance and volume variance) 10.2.5 Sales variances 10.3 Causes of the various variances and remedies

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