Unit14: Advanced Management Accounting
Unitcode Y/508/0537
Unitlevel 5
Creditvalue 15
Introduction
Theoverallaimofthisunitistodevelopstudents’understandingofmanagement accounting.Thefocusofthisunitisoncritiquingmanagementaccountingtechniques and using management accounting to evaluate company performance. Students will explorehowthedecisionstakenthroughtheuseofmanagementaccounting techniquesinfluencemanagerialbehaviouracrossanorganisation.
Onsuccessfulcompletionofthisunitstudentswillbeinapositiontosupportan organisation to create value through effective decision-making where management accountingisused,tosomedegree,tocontrolmembersofanorganisation.In addition,studentswillhavethefundamentalknowledgeandskillstoprogressontoa higher level ofstudy.
Learning Outcomes
By the end of this unit students will be able to:
- Analysethepurposefordevelopingandpresentingfinancialinformation.
- Evaluate the use of management accounting techniques to supportorganisational performance.
- Analyseactualandstandardcoststocontrolandcorrectvariances.
- Evaluate how a changing business environment impacts on management accounting.
Essential Content
LO1 Analyse the purpose for developing and presenting financial information
Users of financial information:
This would include investors, senior management, banks and government.
Developing financial statements:
Critiquing why financial information should be developed into statements.
Thevalueoffinancialstatementsinsupportofafinancialplananddecision- making.
Presenting financial information:
Critiquingtheuseofprofitandlossstatements,trialbalances,cashflow statementsandbalancesheetsasmethodstopresentfinancialinformation.
LO2 Evaluate the use of management accounting techniques to support organisational performance
Microeconomic techniques:
Thesewouldincludecostanalysis,cost-volumeprofit,flexiblebudgetingandcost variances.Alsoconsiderabsorptionandmarginalcosting.
Cost allocation:
Consideringthetheoreticalaspectsaswellashowthisisappliedinpractice.
Capital and capital budgeting:
Themeaningbehindthesetermswillbediscussed,theirimportanceandtheir use.TechniquesincludeNetPresentValue(NPV),InternalRateofReturn(IRR), DiscountedCashFlow(DCF)andpaybackperiods.
LO3 Analyse actual and standard costs to control and correct variances
Actual costs:
What does this mean?
How is actual cost determined?
How does this differ to estimated or standard costs?
Standard costs:
What does this mean?
How is standard cost determined?
How does estimating standard costs result in variances?
Variances:
Varianceanalysisasaconceptandatechnique. Negativeandpositivevariances.
How can a negative variance be considered a positive and vice versa?
Controlling and correcting variances:
Integrating variance analysis into budget monitoring across an organisation. Reporting systems for monitoring and controlling variances.
Schedule variance vs costvariance.
LO4Evaluatehowachangingbusinessenvironmentimpactsonmanagement accounting
Analysing changes to a business environment:
Internalandexternalanalysistechniques.
Comparingtheoutcomesofanalysistoinformdecisionsandtoevaluatepossible implicationsformanagementaccounting.
Impact of the business environment on management accountingsystems:
Using technology to enhance and support processes andprocedures.
Theroleofimprovedcommunicationwithinasystemtoexpeditedecision- making.
Impact of change on management accounting systems: Determiningtheimpactofdifferenttypesofchange. Deciding how to respond to different types of change. Ensuring effective communication and acceptance of change.
Learning Outcomes and Assessment Criteria
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Pass
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Merit
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Distinction
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LO1 Analyse the purpose for developing and
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presenting financial information
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P1 Analysethepurpose
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M1Evaluatehowandwhy
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D1 Criticallyevaluate
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and presentation of
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financial information
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financial information
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financial information
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shouldbedevelopedand
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supported by effective
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from the perspective of
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appropriately presented
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and appropriate
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different stakeholders.
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to supportfinancial
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judgements.
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planning and decision-
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making.
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LO2Evaluatetheuseofmanagementaccounting techniques to support organisationalperformance
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P2 Evaluate the use of different management accounting techniques in application to supporting organisational performance.
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M2 Evaluate the value and importance of a range of management accounting techniques by assessing both advantages and disadvantages.
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LO2 and LO3
D2Criticallyevaluatethe applicationofdifferent management accounting techniques andvariances tosupportconclusions andrecommendations.
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LO3Analyseactualandstandardcoststocontroland correctvariances
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P3Analysetheconceptof variance analysis in its importance for organisational budget control.
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M3 Evaluate the advantages and disadvantages of different types ofvariances.
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P4 Analyse actual and standard costs to control and correct variances.
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LO4Evaluatehowachangingbusinessenvironment impactsonmanagementaccounting
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D3 Critically evaluate the impact of changes, and support justified recommendations for future communication and acceptance of change.
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P5Evaluatehowexternal and internal factors changing the business environmentimpactupon managementaccounting.
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M4 Determine theimpact of different types of changeandthedecisions madetorespondtothese changes.
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