|
C1.
Management Accounting Fundamentals (FMAF)
Syllabus
overview
Management Accounting Fundamentals is an introduction
to management accounting for students with limited knowledge
or no knowledge of this subject. While this paper focuses
on the application of fundamental methods and techniques,
students are also expected to have an understanding of
when and when not to use them. Students must also appreciate
the contribution made by information technology to management
accounting.
Aims
This
syllabus aims to test the student’s ability to:
- explain
the basic concepts and processes used to determine
product and service costs;
- explain
absorption cost, marginal cost, opportunity cost,
notional cost and relevant cost concepts;
- apply
CVP analysis and interpret the results:
- apply
a range of costing and accounting systems;
- explain
the role of budgets and standard costing within organisations;
- prepare
and interpret budgets, standard costs and variance
statements.
Assessment
There
will be a written paper of three hours. Section A will
use objective testing and will account for 50% of the
marks. Section B will be a compulsory question for 25%
of the marks. Section C will offer a choice of one question
from two for 25% of the marks.
Learning
outcomes and syllabus content
2(i)
Cost determination – 30%
Learning
outcomes
On
completion of their studies students should be able to:
- explain
why organisations use costing systems;
- explain
raw material accounting and control procedures;
- explain
and calculate reorder quantity, reorder level, maximum
stock, minimum stock and economic order quantity;
- explain
FIFO, LIFO and weighted average stock valuation methods;
- calculate
stock, cost of sales and gross profit under LIFO,
FIFO and weighted average;
- explain
labour accounting and control procedures;
- discuss
and calculate factory incentive schemes for individuals
and groups;
- explain
absorption costing;
- prepare
cost statements for allocation and apportionment of
overheads including reciprocal service departments;
- calculate
and discuss overhead absorption rates;
- calculate
under/over-recovery of overheads;
- calculate
product costs under absorption and marginal costing;
- compare
and contrast absorption and marginal costing.
Syllabus
content
- Classification
of costs.
- Materials:
accounting and control procedures.
- Labour:
accounting and control procedures.
- Factory
incentive schemes for individuals and groups.
- Overhead
costs: allocation, apportionment, reappointment and
absorption of overhead costs. NB: the repeated distribution
method only will be used for reciprocal service department
costs.
- Absorption
costing.
- Marginal
costing.
- Materials:
reorder quantity, reorder level, maximum stock, minimum
stock, economic order quantity.
2(ii)
Standard costing – 15%
Learning
outcomes
On
completion of their studies students should be able to:
- explain
the principles of standard costing;
- prepare
the standard cost for a product/service;
- calculate
and interpret variances for sales; materials; labour;
variable overheads and fixed overheads;
- prepare
a report reconciling budget gross profit/contribution
with actual profit.
Syllabus
content
- Principles
of standard costing.
- Preparation
of standard costs under absorption and marginal costing.
- Variances:
materials: total, price and usage; labour: total,
rate and efficiency; variable overhead: total, expenditure
and efficiency; fixed overhead: total, expenditure
and volume (absorption costing); fixed overhead: expenditure
(marginal costing); sales: total sales margin variance.
2(iii)
Costing and accounting systems – 20%
Learning
outcomes
On
completion of their studies students should be able to:
- compare
and contrast job, batch, contract and process costing
systems;
- prepare
ledger accounts for job, batch, contract (in accordance
with SSAP 9) and process costing systems. NB: the
average cost method will only be used for process
costing and students must be able to calculate normal
losses and abnormal loss/gains and deal with opening
and closing stocks;
- prepare
and contrast cost statements for service and manufacturing
organisations;
- prepare
profit and loss accounts from the same data under
absorption and marginal costing and reconcile and
explain the differences in reported profits;
- prepare
accounting entries for an integrated accounting system
using standard costs;
- explain
the difference between integrated and interlocking
accounting systems.
Syllabus
content
- Job,
batch, contract and process costing.
- Cost
accounting statements for services and service industries.
- Marginal
and absorption costing profit and loss accounts.
- Accounting
entries for an integrated accounting system.
- Interlocking
accounting.
2(iv)
Marginal costing and decision-making – 15%
Learning
outcomes
On
completion of their studies students should be able to:
- identify
relevant costs and revenues;
- identify
cost behaviour;
- explain
the contribution concept;
- calculate
and interpret the break-even point, profit target,
margin of safety and profit/volume ratio for a single
product;
- prepare
break-even charts and profit/volume graphs for a single
product;
- calculate
the profit-maximising sales mix for a company with
a single resource constraint which has total freedom
of action;
- discuss
CVP analysis.
Syllabus
content
- Relevant
cost concepts, including sunk costs, committed costs
and opportunity costs.
- Fixed,
variable and semi-variable costs.
- Contribution
concept.
- Break-even
charts, profit/volume graphs, break-even point, profit
target, margin of safety, contribution/sales ratio.
- Limiting
factor analysis.
2(v)
Budgeting – 20%
Learning
outcomes
On
completion of their studies students should be able to:
- explain
why organisations prepare budgets;
- explain
how organisations prepare budgets;
- explain
the use of IT in the budget process;
- prepare
functional budgets, profit and loss account, balance
sheet and a simple cash budget;
- calculate
simple cost estimates using high – low method and
line of best fit;
- prepare
simple reports showing actual and budgeted results;
- explain
the differences between fixed and flexible budgets;
- prepare
a fixed and flexible budget;
- calculate
expenditure, volume and total budget variances.
Syllabus
content
- Budget
theory.
- Budget
preparation.
- IT
and budgeting.
- Cost
estimation and estimating techniques.
- Reporting
of actual against budget.
- Fixed
and flexible budgeting.
|
