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Kasneb CPA Syllabus
Registered Members
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PAPER NO. 14 MANAGEMENT ACCOUNTING |
GENERAL OBJECTIVE |
| To develop the candidate’s knowledge in applying managerial accounting techniques in managerial functions |
14.0 SPECIFIC OBJECTIVES |
A candidate who passes this paper should be able to:
- Explain management accounting terms and concepts
- Analyze costs for managerial decisions
- Apply managerial accounting techniques in decision making
- Apply inventory management techniques to managerial functions
- Evaluate financial and non-financial indicators
- Execute performance evaluation decisions
- Prepare management reports
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CONTENT |
14.1 Nature of management accounting
- Meaning, importance, differences between management and financial accounting, scope, limitations, applications
- Value of information in decision making: Perfect and imperfect information
- Ethical standards of management accountants
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14.2 Cost estimation and forecasting
- An overview of the methods of cost estimation and prediction; engineering, simulation and statistical methods, simple and multiple regression, the statistical properties of regressions
- Time series models, smoothing and extrapolation, stochastic time series, linear time series models, forecasting with time series models
- Application of the methods in solving management accounting problems, learning curve and its application
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14.3 Planning and decision-making
- Cost-volume-profit analysis under uncertainty, computer based sensitivity analysis, statistical analysis, probability tree simulation
- Cost-volume-profit analysis with multiple products
- Risk assessments
- Application of marginal costing: product mix decisions, special orders, make or buy decision, pricing decisions and other similar short-run decisions, relevant information in decision making
- Target pricing, product life cycle
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14.4 Budgetary control and variance analysis
- Relationships between strategic plan and operational plans, preparation of budgets: master budgets: functional budgets (department budgets, cash budgets, proforma financial reports; income statements and balance sheets)
- Flexible and static budgets, purpose of budgetary control; operation of a budgetary control system, organization and coordination of the budgeting function
- Computerized budgeting
- Human aspects of budgeting, emerging trends in budgetary control; ERPS, ABB, ZBB, program budgeting
- Advanced variance analysis and performance evaluation
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14.5 Inventory control decisions
- Cost of holding inventory
- Inventory replenishment models
- Quantity discounts
- Timing of replenishment
- Shortage costs models
- Stochastic inventory models
- Simulation of recorder models
- ABC analysis
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14.6 Performance evaluation decisions
- Responsibility accounting and responsibility centres, segmented reporting
- Methods of evaluating responsibility centre performance such as return on investment and residual income
- Evaluation of foreign based centres such as foreign exchange gains and losses
- Transfer pricing and risk-sharing in decentralized firms, international transfer pricing in foreign centres
- Managerial incentive schemes
- Bench marking
- Target costing
- Kaizen
- Balanced scorecards
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14.7 Financial and non financial performance
- Need for financial statement information
- Cost of information
- Importance and limitations of analysis, techniques of analysis
- Monetary and percentage changes, comparative, trend, ratio analysis and multi variant analysis
- Financial forecasting and distress analysis
- Economic value added (EVA) measurement
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14.8 Information systems and reporting to management
- Meaning, importance and types of information systems
- Management accounting and computers
- Essentials of a good reporting system, steps for effective reporting, methods of presentation, requisites of an ideal report, types of reports
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| Previous: Principles and Practice of Management Next: Advanced Financial Management | Index |
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