ACC 222: COST AND MANAGEMENT ACCOUNTING II
i Course title: ACC 222: COST AND MANAGEMENT ACCOUNTING
II
ii Course aim: The course seeks to provide students with an understanding
of, and ability to produce cost and management accounting
information that is used in planning and control of
organizations. Particular emphasis is placed on mastering the
topics of budgeting, variances and performance evaluation,
relevant costs for decision making, pricing, treatment of
overhead and allocations, and considering the influence that
human behavior and strategic direction have on those
processes and the use of this cost accounting information.
iii Course expected learning At the end of the course, a student should able to:
outcome(s): Apply accounting techniques in business investments
decisions based on future events
Prepare business plan and budgets of activities and
operation that put into accounts future uncertainties.
Apply budgeting concepts to various organizations
and industries and prepare pertinent budgets and
reports.
Evaluate the transfer prices of intermediate products
between and among departments of the same
organization
Evaluate business performance and recommend
appropriate performance measures
Evaluate costs that are relevant in the decision making
process
Explain profit planning and how the master budget
and/or flexible budgets affect and are affected by such
planning
iv Course status-core or elective: Core
v Credit rating: 10 credit points
vi Total hours spent: 100
vii Course Content: 1. THE BUDGETING AND BUDGETARY
CONTROL
Introduction to budgeting process
Types of budget
Uses of budgets
Advantages of Budgets
Preparation of Master budgets
Budgeting in Non-profit organizations
Behaviour aspects in budgeting
2. STANDARD COSTING AND VARIANCE
ANALYSIS
Introduction to standard costing
Types of standards
The use of standard costing systems for control
Variance analysis
Material, labor and Factory overhead variances
Computation and interpretation of basic cost
variances
Computation and interpretation of sales variances
Mix and Yield variances
Planning and operating variances
Accounting for variances
3. COST ESTIMATION AND LINEAR
PROGRAMMING MODEL IN ACCOUNTING
Concept of cost estimation
Reasons for cost estimation
Methods of cost estimations
Interpreting results in cost estimation
Application of linear programming model in cost
accounting
Linear programming graphical and equation models
Linear programming simplex model
4. ALTERNATIVE PRODUCT COSTING METHODS
Marginal and Absorption Costing
Comparison of marginal and absorption costing
Preparation of profit statement under marginal and
absorption costing methods
Reconciliation of the profit under alternative methods
Evaluation of the two methods
5. COST, VOLUME AND PROFIT ANALYSIS
Cost, revenue and profit relationships
CVP assumptions
Uses of CVP analysis
Break-even point analysis
Methods of Calculating breakeven points
The contribution Margin and Contribution ratio
The P/V chart
Marginal of safety
Sensitivity analysis
Degree of operating leverage and CVP analysis
Limitation of CVP analysis
6. DECISION MAKING
Relevant costs and revenue for Decision-Making
Decision making under risk conditions
Decision making methods under risk conditions
Decision making under uncertainty conditions
Decision making methods under uncertainty
conditions
Value of perfect and imperfect information.
Decision making in certainty condition
7. PRODUCT PRICING
Product and service pricing process
Pricing policy
Pricing objectives
Product pricing strategies
Product pricing methods
Pricing and Idle capacity and with opportunity cost.
8. RESPONSIBILITY ACCOUNTING AND
PERFORMANCE MEASUREMENT
Concept of responsibility accounting
Cost, revenue, profit and investment centre
Performance evaluation under responsibility
accounting
Performance measurement models (ROI, RI, EVA,
and SVA).
Advantages of responsibility accounting
Disadvantages of responsibility accounting
9. DECENTRALIZATION AND TRANSFER
PRICING
Concept of Decentralization
Advantages and disadvantages of decentralization
Decentralization in Multinational firms
Transfer pricing
Transfer pricing methods
Calculating transfer pricing methods
viii Teaching and learning Lectures, seminars, assignments and independent study
activities:
ix Assessment Methods: Test, Individual Assignment, Group Assignment and Final
examination.
x Reading list : Books:
A Managerial Emphasis, 15thed, Englewood Cliffs:
Prentice- Hall.
Drury, C (2015). Cost and Management and Cost
Accounting, 9thed, London: International Thomson
Business Press.
Garrison, D, Noreen, E and Brewer, P (2014),
Managerial Accounting, 15thedNew York, USA..
McGraw-Hill, Irwin.
Hilton, R, Maher, M and Selto, F (2012), Cost
Management: Strategies for Business Decisions, Inter.
Edition, New York, USA: McGraw Hill, Irwin,.
Horngren, C, Datar, S and Rajan, M, (2014) Cost
Accounting:
T. Lucey, (2008) Costing,7thed, D.P. Publication,
London.
