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Analyse the purpose for developing and presenting financial information

Post Date: 18 - Aug - 2023

Unit14:      Advanced Management Accounting


Unitcode   Y/508/0537

Unitlevel 5

Creditvalue     15


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:


  1. Analysethepurposefordevelopingandpresentingfinancialinformation.
  2. Evaluate the use of management accounting techniques to supportorganisational performance.
  3. Analyseactualandstandardcoststocontrolandcorrectvariances.
  4. 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:


 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?




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:


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






LO1 Analyse the purpose for developing and


presenting financial information


P1 Analysethepurpose


D1 Criticallyevaluate

and presentation of

financial information

financial information

financial information


supported by effective

from the perspective of

appropriately presented

and appropriate

different stakeholders.

to supportfinancial



planning and decision-





LO2Evaluatetheuseofmanagementaccounting techniques to support organisationalperformance


P2 Evaluate the use of different management accounting techniques in application to supporting organisational performance.

M2 Evaluate the value and importance of a range of management accounting techniques by assessing both advantages and disadvantages.

LO2 and LO3

D2Criticallyevaluatethe applicationofdifferent management accounting techniques andvariances tosupportconclusions andrecommendations.

LO3Analyseactualandstandardcoststocontroland correctvariances


P3Analysetheconceptof variance analysis in its importance for organisational budget control.

M3 Evaluate the advantages and disadvantages of different types ofvariances.


P4 Analyse actual and standard costs to control and correct variances.



LO4Evaluatehowachangingbusinessenvironment impactsonmanagementaccounting



D3 Critically evaluate the impact of changes, and support justified recommendations for future communication and acceptance of change.

P5Evaluatehowexternal and internal factors changing the business environmentimpactupon managementaccounting.

M4 Determine theimpact of different types of changeandthedecisions madetorespondtothese changes.


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