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Introduction to Management Accounting

Module description

Summary:

Think of an iPhone. How much do you think that it cost Apple to make? Think of recent business news stories, with factory and store closures. As ways of cutting costs, how successful will these actually be? Or, maybe news stories announcing the launch of a new tablet PC – how has the manufacturer decided that this is a worthwhile product? Management accounting provides information which supports business decisions like these, whether it is setting selling prices, or understanding costs, assessing performance, and investing in new products. At an introductory level, this module considers costs and revenues, and how they can be measured and used to calculate profit and help make decisions, both in the short and long term. It also examines how budgets are prepared, and used as benchmarks to assess performance. Accounting? Boring? Never!

Additional Information:

Internationalisation

This module introduces subjects like costing, decision making, budgeting and budget outcomes which are relevant across countries.

External Engagement

The module content meets the standards of the professional accountancy bodies (e.g. ICAEW, ACCA, ICAS, CIMA) and the module is accredited by them.

Sustainability

Sustainability is discussed in relation to wastage and the comparison between actual and expected performance.

All of the resources for this module are available on the ELE (Exeter Learning Environment).

Employability

Students develop their skills in team-working and problem-solving, as well as their numeracy and discursive skills.

Module aims - intentions of the module

The aim of the module is to provide students with a range of computational and analytical skills, from estimating the cost of a product and reporting on profit earned, to preparing analyses to support operating and investment decisions. The need to present results in an accessible way is also highlighted. All of these skills will be useful to those entering a wide range of occupations where financial data need to be handled professionally and with insight.

Intended Learning Outcomes (ILOs)

ILO: Module-specific skills

On successfully completing the module you will be able to...

• 1. describe the purpose and role of cost and management accounting
• 2. identify different cost characteristics
• 3. explain and apply the different techniques used in accounting for materials, labour and production overheads
• 4. describe job and batch costing; and prepare accounts in job costing situations
• 5. describe process costing and its uses for inventory valuation and the costing of joint and by-products
• 6. describe marginal costing and its use in cost-volume-profit analysis
• 7. explain the role of budgeting in financial planning and control, and explain different budget types
• 8. prepare budgets for sales, production, materials (usage and purchases), labour and overheads
• 9. explain and prepare fixed, flexible and flexed budgets
• 10. explain the purpose and principles of standard costing
• 11. calculate and interpret variances for: sales, materials, labour, variable overheads and fixed overheads
• 12. apply management accounting information for long-run decision making, employing basic investment appraisal techniques

ILO: Discipline-specific skills

On successfully completing the module you will be able to...

• 13. explain how managers use accounting information to aid decision making, planning and control
• 14. apply management accounting concepts and practices to analyse business problems
• 15. identify and present appropriate information to assist management with controlling the business and taking financial decisions

ILO: Personal and key skills

On successfully completing the module you will be able to...

• 16. demonstrate basic written communication skills
• 17. demonstrate basic problem solving skills

Syllabus plan

• Introduction to management accounting
• Cost classification and costing systems
• Accounting for materials, labour and overheads
• Overhead accounting: absorption costing v. activity-based costing
• Job versus process costing
• Marginal costing and contribution
• Cost-volume-profit (CVP) analysis
• Planning and control
• Budgeting
• Standard costing and variance analysis
• Long term decision making and investment appraisal
• Revision

Learning activities and teaching methods (given in hours of study time)

Details of learning activities and teaching methods

Formative assessment

Summative assessment (% of credit)

Details of summative assessment

Details of re-assessment (where required by referral or deferral)

Re-assessment notes

If you pass the module overall you will not be referred in either component – even if you have not passed one of the components.

Indicative learning resources - Basic reading

Basic reading:
Burns, J., Quinn, M., Warren, Oliveira, J. (2013) Management accounting, Maidenhead: McGraw-Hill Education

Seal, W., Garrison, R., & Noreen, E. (2012) Management accounting (4th ed.), Maidenhead: McGraw-Hill Education

Drury, C. (2018) Management and cost accounting, 10th ed., Andover: Cengage Learning EMEA

Key words search

Management Accounting, Costing