Course : Management Accounting for Decision Making

Course Code : BMKT 32263

Credit Value : 3

Status : Compulsory

Level                           : Level 3

Semester                     : Semester II

Overall Learning Outcomes : At the end of the course unit students should be able to;

  1. appraise information from a Cost Accounting view point in making business decisions
  2. criticize traditional planning and controlling techniques and to ascertain the use of modern techniques in planning and controlling
  3. recognize relevant and irrelevant information for decision making
  4. construct a capital budget
  5. determine information relevant to pricing and compose the optimum pricing decision
  6. assess divisional performance measures
  7. examine working capital management and analyze various working capital decisions
  8. display a thorough understanding of various Management Accounting concepts in making business decisions

Course Content         :

Topic No

Topic

Learning Outcomes

Teaching and Learning Method

Method of Assessment

1

Cost Accounting Information for Decision Making

At the end of the session students should be able to;

  1. calculate and analyze product profitability and customer profitability decisions under traditional costing and activity based costing
  2. evaluate the importance of ABC generated information for value analysis from an operational and strategic perspective
  3. assess the key features of Marginal costing and Throughput accounting (including different types of measures used in Throughput accounting)
  4. discuss the use of Marginal costing and Throughput accounting in stock valuation, profit calculation, and limiting factor (bottleneck resource) decision making
  5. recognize the implications of techniques such as TQM, JIT, AMT, Kaizen, and etc. on modern management accounting (including a discussion on Back flush Accounting)


Lectures

Case study based discussions

Individual assignment on case study writing based on a selected company

End Semester Examination


2

Planning & Controlling

At the end of the session students should be able to;

  1. recognize the limitations of traditional planning and control systems (especially with reference to standard costing and budgeting)
  2. explain the impact of learning/experience curve on planning and controlling
  3. discuss “beyond budgeting” as a potential solution for criticism levelled at traditional budgetary planning and control
  4. explain benchmarking and assess the importance of benchmarking (including different types of benchmarking) in planning and controlling
  5. appraise the importance of balance scorecard as a strategic planning and control tool



Lectures

Case study based discussions

Individual assignment on case study writing based on a selected company

End Semester Examination


3

Relevant and irrelevant information

At the end of the session students  should be able to;

  1. identify relevant and irrelevant information for decision making
  2. demonstrate relevant costs under material, labour, make or buy, continue/ discontinue/ outsource, accept or reject decisions
  3. assess the concepts of Break-Even Point, Margin of Safety, Contribution/Sales(C/S) ratio and Profit/Volume (P/V) charts in analysing cost-volume-profit (CVP) in an organization


Lectures

Case study based discussions

Individual assignment on case study writing based on a selected company

End Semester Examination


4

Capital Budgeting

At the end of the session students should be able to;

  1. explain the process of long term decision making (including; proposal generating, initial screening, analysis & acceptance, and monitor & review)
  2. appraise investment projects using non-DCF (payback and ARR) and DCF (NPV and IRR) techniques with:

-          Tax

-          Inflation (monetary and real methods)

-          Unequal life projects (annual equivalent method only)

-          Asset replacement

-          Capital rationing (including multi period capital rationing)

-          Under uncertainty (certainty equivalent, adjusting DCF/payback, using probability, alternative decision making criterions, and sensitivity analysis)


Lectures and

Case study based discussions

Individual assignment on case study writing based on a selected company

End Semester Examination


5

Pricing: External

& Internal

At the end of the session students should be able to;

  1. discuss the financial implications (including tax implications) of various pricing methods, such as cost based and market based pricing, (including; skimming, penetration, loss leader pricing, premium pricing, price discrimination)
  2. assess the importance of Target Costing in developing a sustainable and a profitable product whilst making the required ROI
  3. demonstrate the importance of Life Cycle Costing in taking an overall view on product or process costs (including reference to the advent of Environmental Management Accounting)
  4. identify decentralization and different types of responsibility centers (including; revenue, cost, profit and investment centers)
  5. discuss different types of transfer pricing possible under decentralized organizational structure (including; maximum & minimum price, cost based pricing, market based pricing, dual pricing, negotiated pricing)
  6. assess divisional performance using Return on Investment (ROI), Residual Income (RI), and Economic Value Added (EVA)


Lectures and

Case study based discussions

Individual assignment on case study writing based on a selected company

End Semester Examination


6

Working Capital Management

At the end of the session students should be able to;

  1. define the term working capital management
  2. discuss the investment and financing functions of Working Capital Management (including; working capital cycle, overtrading, and working capital policies)
  3. discuss Inventory Management (including optimum inventory decision (EOQ) and the decision to accept a quantity discount or not)
  4. discuss Cash Management options (surplus and deficit managing options) including cash management models of baumol and Miller-Orr models
  5. assess the price and/or rate of ‘securities’ as part of Cash Management (including; for short term securities interest yield leading to annual effective interest rate, and for long term securities yield to maturity using IRR methodology)
  6. discuss Receivable and Payable Management (including; credit policy, credit assessment, credit control, & collection, and factoring option)
  7. appraise Receivable/Payable management decisions (including; cash discounts, age analysis, change in credit policy, factor or not


Lectures and

Case study based discussions

Individual assignment on case study writing based on a selected company

End Semester Examination


Recommended Reading      :

  1. ACCA Study Text, (Any edition), ‘P2’, ‘P5’, or ‘F9’, BPP publications.
  2. Atkinson, A., Kaplan, R.S. and Young, S.M. (2011), “Management Accounting”, 6th Edition, Prentice Hall.
  3. CIMA Study Text, "Performance Operations" and "Performance Management", Kaplan publications.
  4. Drury, C. (2007), “Management and Cost Accounting”, 7th Edition, Cengage Lrng Business Press.
  5. Hilton, R. (2010), “Managerial Accounting”, 9th Edition, McGraw Hill publications.

Website referencing          :

http://www.maaw.info/IntroToMAAW.htm

http://www.kln.ac.lk/library/02-periodicals-section.htm

 

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