MANAGEMENT ACCOUNTING – LEVEL 3

The aim of the examination is to test the candidate’s knowledge and understanding of the basic principles involved in short-term cost behaviour, short and long term decision making and short-term profit control, cash management and product cost ascertainment.

Syllabus

1 Short-term Cost Behaviour
(Effective assessment of the cost effects of the various alternatives open to management) Fixed, variable, and semi-variable costs. Segregation of semi-variable costs into fixed and variable components. The identification of cost behaviour.

2 Short-term Decision Making
(The basic principles upon which short-term decisions should be based) Marginal costs. Contribution theory. Cost volume profit analysis; use of opportunity costs; preparation of break even charts; their value and limitations. Differential costing. Cash flow statements. Key or limiting factors. Sales pricing.

3 Short-term Profit Control
(Appreciation of the principles and comprehension of control documents) Principles of profit control. Preparation of standard costs and budgets. Variance analysis and the reporting of variances. Control standards. Control diagnosis

4 Cash and Working Capital Management
(The effects of management decisions on the cash flow) Concept of working capital. The effects of sales expansion on working capital. Product/Project life cycles. Cash budgeting. Working capital ratios

5 Long-term Decision Making and Control
(Appreciation of useful techniques, and the production of data) Long-term financial planning. Discounted cash flow techniques. Relevant costs

6 Product Cost Ascertainment
(The methods by which the costs of operations, processes, departments or products are ascertained)
Problem of charging overheads to products. Overhead analysis techniques. Overhead absorption techniques. Overhead under and over absorption

7 Transfer Pricing and Performance Evaluation
(Its importance in decentralized organizations) The reasons for transfer pricing and an introduction to the problems it may create within highly interdependent structures

Course Duration: 50 hours