BBM 221 Management Accounting I

Nature, Purpose and Scope of Management Accounting

Sub Topics:

  • Definitions- Managerial Accounting, Cost Accounting, Financial Accounting
  • Evolution of Management Accounting
  • Objectives of Management Accounting
  • Difference between Management and Financial Accounting
  • Management Accounting System
  • The Management Accounting Guidelines
  • Role of management accounting in management process

DECISION MAKING

Sub Topics:

  • Decision Making Process
  • Decision Making Conditions
  • Decision Making Techniques- Decision trees analysis; Maximin, Maximax, Laplace and Minimax regret criteria; Probability distributions, Expected values, standard
    deviation, coefficient of variation; Portfolio analysis, Grid Analysis

COST ESTIMATION AND FORECASTING

  • Cost Concept
  • Cost Classifications- Stock valuation and profit measurement; Planning control and decision making- Cost behavior, According to the degree of traceability to the final
    product, Relevance
  • Managerial ability to avoid, According to functions of department, Cost Estimation Methods- Accounts analysis (Accounts inspection method), The two point method (High-Low Method), Regression analysis (least-square method), Graphical method, Conference method, Engineering methods

SHORT TERM PLANNING

  • Sub Topics:
  • Cost Volume Profit Analysis
  • Assumption of CVP analysis
  • The Break- Even Point
  • B. E. P in Graphical Form
  • B. E. P in Mathematical Formula
  • Margin of safety
  • C V P in Multi-product Environment
  • Criticisms of CVP analysis

RELEVANT COSTS FOR NON ROUTINE DECISION

Sub Topics:

  • The concept of cost relevance to decision making
  • Assumptions of Relevant Costing
  • Quantitative and qualitative factors in decision making
  • Limiting factors in decision making
  • Special pricing decisions
  • Make or buy decisions
  • Discontinuation decisions
  • Equipment replacement decisions

ABSORPTION COSTING AND MARGINAL COSTING

Sub Topics:

  • Absorption Costing
  • Overhead Cost Allocation
  • Overhead Cost Apportionment- Direct method, The step (elimination) method, Continuous (repeated distributed) method, Algebraic method
  • Overhead Absorption
  • Application of Overhead to Product
  • Marginal / Variable Costing Vs Absorption Costing
  • A comparison of the impact of variable costing and absorption costing on profit
  • Activity Based Costing (ABC)

BUDGETING

Sub Topics:

  • Budgetary Control
  • The role and rationale of budgeting- Functions of budgets, Advantages of budgets and budgetary control systems
  • Types of budgets
  • Mechanics of budgeting
  • Stages in the budgeting process
  • Steps in developing a master budget
  • Human aspects of budgeting
  • Alternative Budgeting Procedures- Zero-Based Budgeting (ZBB), Activity-Based Budgeting, Incremental budgeting
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