Management Accounting

Paper Code: 
AAF 212
Credits: 
3
Contact Hours: 
45.00
Max. Marks: 
100.00
Objective: 

To develop knowledge and understanding of management accounting techniques to support Management in planning, controlling and monitoring performance in a variety of business context.

Course Outcome (COs):

Course

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies

Paper Code

Paper Title

AAF 212

Management Accounting

Upon successful completion of this course, the student will be able to:

 

CO 46: Summarize thoroughly the conceptual framework of Management Accounting; identification of differences between Cost Accounting and Management Accounting.

CO 47: Judge and analyze capital budgeting process and capital budgeting techniques.

CO 48: Analyze various theories of dividend and factors affecting dividend policy.

CO 49: Justify the concept of cost of capital and computing cost of different sources of capital.

CO 50: Combine the concept of relevant and irrelevant costs and make decisions related to product and production using marginal costing and differential costing techniques.

CO 51: Measure budgetary control system as a tool of managerial planning and control; develop an ability to prepare various types of budget.

Approach in teaching:

Interactive Lectures, Discussion, Tutorials, assignments.

 

Learning activities for the students:

Self-learning assignments, Effective questions,  Giving tasks, Solving numerical problems

 

Class test, Semester end examinations, Quiz, Solving problems in tutorials, Assignments,  Individual projects

 

6.00
Unit I: 
The nature, source and purpose of management information
  • Accounting for management- purpose and role of cost and management accounting,  Comparison between  financial accounting, cost accounting and management accounting.
  • Distinction between data and information. Identify and explain the attributes of good information.
  • Limitations ofmanagement information in providing guidance  for managerial decision-making.
  • Sources of data- sources of information from within and outside the organisation (including government statistics,financial press, professional or trade associations, quotations and price list.
  • Uses and limitations of published information/data Impact of general economic environment on costs/revenue          
  • Sampling techniques (random,  systematic,  stratified, multistage,  cluster  and  quota),  identifying  appropriate sampling method in a specific situation.   

Presenting information

  • Reports representing management information in suitable formats
  • Present information using tables, charts and graphs (barcharts, line graphs, pie charts and scatter graphs)Interpret information presented in management reports
9.00
Unit II: 
BUDGETING
  • Nature and purpose of budgeting Planning and control cycle in an organization Administrative procedures and stages used in the budgeting process
  • Statistical techniques Advantages and disadvantages of using high low method to  estimate the fixed and variable element of costingScatter diagrams and lines of best fit.
  • Analysis of cost data Concept, calculation and interpretation of correlation coefficient and coefficient of determination, Establish a linear function using regression analysis and interpret the result.
  • Use linear regression coefficients to make forecasts of costsand revenues              .
  • Advantages and disadvantages of linear regression analysis.       
  • Product life cycle – Concept and importance                               
  • Principles of time series analysis (cyclical, trend, seasonal variation   and   random   elements),   advantages   anddisadvantages, Moving  averages,  trend  analysis  using regression coefficients. Trend and seasonal variation (additive and multiplicative) to make budget forecasts, Purpose of index numbers, Calculate simple index numbers for one or more variables
  • Computer spreadsheet system- role and features, applications and its use in cost and management accounting
  • Budget preparationàConcept and importance of budget Prepare sales budgets, functional budgets (production, raw materials usage and purchases, labour, variable and fixed overheads),Cash budgets, Master budgets. Explain and illustrate  ‘what if’ analysis and scenario planning.
  • Flexible budgets Importance,advantages and disadvantages of flexible budgets, Identify situations where fixed or flexible budgetary control would be appropriate. Fix a budget to a given level of volume

 

9.00
Unit III: 
Capital budgeting and discounted cash flows:
  • Capital investment planning and control.
  • Define and distinguish between capital and  revenue expenditure,
  • Preparation of a capital expenditure budget, difference between simple and compound interest, and between nominal and effective interest rates
  • Compounding and discounting distinction between cash flow and profit and the relevance of cash flow to capital investment appraisalcash flows for individual investment decision net present value (NPV) and internal rate of return (IRR) methods of discounted cash flow Calculate NPV,IRRandpayback(discounted and non- discounted) Calculate NPV, IRR and payback (discounted and non- discounted)
12.00
Unit IV: 
Budgetary control and reporting
  • Calculate simple variances between flexedbudget, fixedbudget and actual sales, costs and profits
  • Importance  of  variances, potential action to eliminate Variances
  • Controllable and uncontrollable costs
  • Control reports to management
  • Behavioural aspects of budgeting, importance of motivation in  performance management,  factors  in  a  budgetary planning that influence motivation, Impact of targets upon motivation Managerial incentive schemes, advantages and disadvantages of a participative approach to budgeting, & top down, bottom up approaches to budgeting

STANDARD COSTING

  • Standard costing systems- Purpose, principles and importance. Difference between standard, marginal and absorption costing standard cost per unit under absorption and marginal costing Calculation of Material, Labour and Overhead Varianceand its analysis,sales price and volume variance Interpret the variances,
  • Explain factors to consider before investigating variances, explain possible causes and recommend control action. Explain the interrelationships between the variances
  • Reconcile budgeted profit with actual profit under standard absorption costing
  • Reconcile budgeted profit or contribution with actual profit or contribution under standard marginal costing
9.00
Unit V: 
PERFORMANCE MEASUREMENT
  • Performance measurement overview, purpose of mission statements and their role in performance measurement.
  • Purpose of strategic and operational and tactical objectives and their role in performance measurement
  • Impact of economic and market conditions on performance measurement, impact of  government  regulation  on performance measurement.
  • Measure of financial performance and non financial measures. Perspective of balance scorecard.
  • Performance indicators for financial success, customer satisfaction, process efficiency and growth. CSF and KPI and their link to objectives.
  • Profitability and service quality.
  • Cost reduction and value enhancement.
  • Value monitoring.
  • Measuring performance in service sector.

 

Essential Readings: 
  1. Management Accounting-Agrawal, Agrawal (Ramesh Book Depot)
  2. Management Accounting-Khan and Jain(Tata McGraw Hill)
  3. Management Accounting-M.R Agarwal(Garima Publications)
  4. Management Accounting: S. K Singh( Sun India Publications)
  5. Management Accounting-H.Chakraborty and S. Chakraborty(Oxfor University Press)
  6. Management Accounting and Financial Analysis-Dr S.N Maheshwari(S.Chand& Sons)
  7. Management Accounting- N. Vinayakkam& IB Sinha (Himalaya Publishing House)
  8. Advance Management Accounting-R.S Kaplan& A.A Atkinson (Prentice Hall India New Delhi)
Academic Year: