Management accounting BA2120

Accounting for management (BA1020)

Basic idea of cost behaviour and estimation and emphasise the difference between fixed and variable costs as one approach and direct and indirect as another approach.
The relationships between costs, volumes and profits.
Break-even chart or the more practical profit/volume graph.
Looks at the effect splitting costs and profits can have on stock valuations and hence reported profits.
Activity based costing
Placing budgets into the strategic and information control systems of the organisation.
The importance of marginal costing in decision making.
Anticipated costs
Variance analysis.
How long-term investment decisions are made (investment appraisal, capital budgeting, capital investment or long-term planning.)
The cost of capital, the discount rate, is the return which the investors require.
Performance measurement (quantitative and non-quantitative measures)
Return on Investment (ROI) and Residual Income (RI).
The Balanced Scorecard
Dividing up that profit between the various divisions
The idea of economic value added – or EVA.

By the end of this module students should be able to:

Understand and apply management accounting techniques;
Be aware of the current developments in management accounting as they affect both manufacturing and service based industries;
Apply investment appraisal techniques in complex situations and be aware of the advantages and disadvantages of the different approaches;
Understand the role of accounting in developing strategies for the organisation;
Understand the role accounting data plays in the pricing decision;
Calculate the cost of capital for an organisation.

This module is assessed by a three hour unseen written examination.

Management and Cost Accounting. C.Drury (2012)
Management and Cost Accounting. A Bhimani, C.T. Horngren, S.M. Datar, M. Rajan (2011)