Performance Management

Paper Code: 
AAF 211
Credits: 
6
Contact Hours: 
90.00
Max. Marks: 
100.00
Objective: 

To develop knowledge and skills in the application of management accounting techniques to quantitative and qualitative information for planning, decision-making, performance evaluation, and control

Course Outcome (COs):

Course

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies

Paper Code

Paper Title

AAF 211

Performance Management

CO 41: Apply different management accounting techniques like Activity based costing , life cycle costing, target costing, throughput accounting environmental management accounting in different business contexts to effectively manage and use resources

CO 42: Calculate relevant cost. Perform cost volume profit analysis through formulae and charts.  Interpret limiting factors and solve multiple scarce resource problems. Explain the pricing strategy and understand decision making under uncertainty and risk.

CO 43: Explain and prepare various types of budgets. Perform quantitative analysis in budgeting. Estimate the learning effect and apply this to a budgetary problem

CO 44: Calculate from information supplied, various types of variances and  explain possible causes, including possible interrelationships between them.

CO 45: Calculate from given data, and interpret financial performance indicators (FPIs) for profitability, liquidity and risk in both manufacturing and service businesses, and suggest methods for improving these measures. Explain and interpret the Balanced Scorecard and its elements as well as the Building Block model. Comment on the   problems, using simple examples, of having multiple objectives in not-for-profit organisations and the public sector. Understand the role of information systems in organisations and need of  security of highly confidential information that is not for external consumption. Identify and discuss privacy and security issues.

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

 

18.00
Unit I: 
Specialist cost and management accounting techniques
  • Activity-based costing-Meaning, cost drivers, Calculation of costs per driver and per unit using ABC, ABC Vs traditional methods
  • Target costing- Meaning, target costing in manufacturing and service industries, challenges of using target costing in service industries.
  • Life-cycle costing-Meaning, Benefits, life cycle cost in manufacturing and service industries.
  • Throughput accounting-Meaning, throughput accounting ratio (TPAR), Application of throughput accounting to a multi-product decision- making problem
  • Environmental accounting-Meaning, challenges, methods of environmental accounting
 
18.00
Unit II: 
Decision Making Techniques
  • Relevant cost analysis- Concept, Identification and calculation of relevant costs, concept of opportunity costs. 
  • Cost volume analysis-Meaning, nature, limitations, Breakeven point, Margin of safety, Multiproduct situation, Breakeven chart and profit volume charts. 
  • Limiting factors-Meaning, multiple scarce resource problem (both graphically and using simultaneous equations as appropriate), calculation of shadow prices (dual prices) and slack- implications on decision-making and performance management. 
  • Pricing decisions-factor influencing the pricing of a product or service, price elasticity of demand, decision based on incremental costs, incremental revenues and other factors, optimum selling price and quantity for an organization, demand based approach to pricing (both tabular and algebraic methods, pricing strategies, including: i) All forms of cost-plus, ii) Skimming, iii) Penetration, iv) Complementary product, v) Product-line, vi) Volume discounting, vii) Discrimination, viii) Relevant cost, Calculation of a price from a given strategy using cost-plus and relevant cost. 
  • Make-or-buy and other short-term decisions- 
  • Dealing with risk and uncertainty in decision making-research techniques to reduce uncertainty e.g. Focus groups, market research, use of simulation, expected values and sensitivity, techniques of maximax, maximin,andminimax regret in decision-making , decision tree, value of perfect and imperfect information. 
18.00
Unit III: 
Budgeting
  • Budgetary systems- budgetary systems for an organization, including top-down, bottom-up, rolling, zero-base, activity base, incremental and feed-forward control, information used in budget systems and the sources of the information needed, difficulties of changing a budgetary system, budget systems and uncertainty in the environment.
  • Types of budget-, Preparation of rolling budgets and activity based budgets, usefulness and problems with different budget types (fixed, flexible, zero-based, activity- based, incremental, rolling, top-down, bottom up, master, functional), challenges of changing the type of budget used.
  • Quantitative analysis in budgeting- high/low method, learning rate and learning effect, learning curve, benefits and dangers inherent in using spreadsheets in budgeting
 
18.00
Unit IV: 
Standard costing
  • Meaning
  • Material mix and yield variances-causes, issues involved in changing material mix e.g. cost, quality and performance measurement issues,
  • relationship of the material usage variance with the material mix and yield variances, methods of controlling production processes.
  • Sales mix and quantity variances-causes, relationship of the Sales volume variances with the sales mix and quantity variances.
  • Planning and operational variances- Calculation of a revised budget,
  • factors to revise an original budget, explain planning and operational variances for: sales, including market size and market share; materials;
  • labour, including the effect of the learning curve.
  • Performance analysis and Behavioral aspects- variance analysis, factors influencing behavior, effect of variances on staff motivation and action,
  • JIT and TQM, behavioural problems resulting from using standard costs in rapidly changing environment.
18.00
  • Performance measurement and control
  • Performance management information,Sources of management information 
  • Management reports, Performance analysis in private sector organizations
  • Divisional performance and transfer pricing
  • Performance analysis in not-for-profit organizations and the public Sector, External considerations and behavioral aspects.
References: 
  • Management Accounting and Financial Analysis-Dr S.N Maheshwari(S.Chand& Sons) Cost Accounting Principles & Practices, M.N Arora .
  • Advance Management Accounting-R.S Kaplan& A.A Atkinson (Prentice Hall India New Delhi)
  • Management Accounting,Horngren, Management Accounting, Pearson Education. Management Accounting Principles, Anthony Robert, R D. Irwin.
  • Cost & management accounting, Duncan Willianson, , PHI learning.

Note- The candidate shall be permitted to use battery operated pocket calculator that should not have more than 12 digits, 6 functions and 2 memories and should be noiseless and cordless

 

Academic Year: 
2020-2021
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