Management Accounting and Performance Measurement

The indicative module outline is as follows:

The Role and Scope of Management Accounting: The purpose and evolution of management accounting, the distinction between management and financial accounting, the role of the management accountant in modern organisations, value chain analysis, and the impact of digitalisation and sustainability on management accounting practice.

Cost Classification, Behaviour, and Terminology: Types of cost (fixed, variable, semi-variable, stepped), cost objects, cost centres, cost drivers, direct and indirect costs, product and period costs, and the relevance of cost behaviour to decision-making and planning.

Absorption Costing and Marginal Costing: Full absorption costing and overhead absorption rates, under- and over-absorption of overheads, marginal costing and contribution analysis, the reconciliation of profit under absorption and marginal costing, and the implications of each approach for stock valuation and decision-making.

Activity-Based Costing: The limitations of traditional overhead absorption, the principles and mechanics of activity-based costing (ABC), cost pools and cost drivers, activity-based management (ABM), and the application of ABC to pricing, profitability analysis, and process improvement.

Standard Costing and Variance Analysis I: The purpose of standard costing, types of standards, setting standards for materials, labour, and overheads, calculation and interpretation of material price and usage variances and labour rate and efficiency variances, and reconciliation of budgeted and actual profit.

Standard Costing and Variance Analysis II: Fixed and variable overhead variances, sales price and volume variances, planning and operational variances, the investigation of variances, behavioural implications of standard costing, and the relevance of standard costing in modern manufacturing environments.

Budgeting and Budgetary Control: The purposes and process of budgeting, preparation of functional budgets and the master budget, fixed and flexible budgets, zero-based budgeting, beyond budgeting, rolling forecasts, and the behavioural and organisational dimensions of budgetary control systems.

Short-Term Decision Making: Relevant costing and the identification of relevant costs and revenues, contribution analysis and break-even analysis, margin of safety, limiting factor analysis and linear programming, make-or-buy decisions, shutdown decisions, and pricing decisions including cost-plus and target pricing.

Capital Investment Appraisal: Net present value, internal rate of return, payback period, and accounting rate of return, incorporating taxation and inflation into investment appraisal, sensitivity analysis and scenario planning, real options in capital budgeting, and post-completion audit of capital projects.

Divisional Performance Measurement and Transfer Pricing: Divisionalisation and decentralisation, responsibility centres, performance measures for investment centres including return on investment and residual income, economic value added (EVA), transfer pricing methods and their behavioural and tax implications, and international transfer pricing considerations.

Strategic Management Accounting and the Balanced Scorecard: The limitations of traditional financial performance measures, the Balanced Scorecard and its four perspectives, key performance indicators, strategy maps, target costing and kaizen costing, benchmarking, and the integration of non-financial and sustainability measures into performance management systems.

Contemporary Issues in Management Accounting: The impact of artificial intelligence, big data, and enterprise resource planning (ERP) systems on management accounting practice, the role of management accountants in sustainability and integrated reporting, lean accounting, and the future of the management accounting profession.