1. AIM

The aim of this module is to instil the knowledge, key skills and competencies necessary to act in a Cost and Management Accounting function.

At the conclusion of this module the candidate will be able to.

  • Understand the framework of Cost and Management Accounting.
  • Perform cost accounting functions using the various costing methods.
  • Advise Management on business decisions based on cost and management accounting concepts.
  • Analyse the cost accounts and use variance analysis to guide decision making.
  • Develop suitable costing systems for the organization.

Evidence of assessed pre-requisite knowledge and understanding in the following disciplines must be demonstrated through the Institute’s examinations, or those of equivalent qualifications which have been approved as meeting the Institute’s qualifications.

  • All of Part A
  • Taxation
  • Financial Accounting
  2. 4.1. Distinction between cost accounting, management accounting and financial accounting.
  3. 4.2.Elements of cost
  4. 3.Classification of materials
  5. 4.Quality and Control
  6. 5.Remuneration
  7. 6.Overheads
  8. 7.Product costing
  9. 8.Budgetary Control
  10. 9.Marginal costing
  11. 10.Standard costing
  12. 11.Divisional Performance Evaluation
  13. 12.Decision Theory
  14. 13.Quantitative Techniques in Management Accounting
  15. 14.Presentation of Information to Management

Their nature and classification. Cost centres and cost units.

Relationship between costs and financial accounts. Double entry theory applied to cost accounting records, interlocking and integral accounts.

Purchasing stores. Basic controls applied to purchasing (including economic order quantity), pricing of stores issues and inventory valuation, valuation of work in progress.

Just In Time Purchasing and Manufacturing

Total Quality Management

Principles of wages control including the learning curve and payroll routine.

Analysis and classification of overhead expenses, their apportionment to cost centres and absorption into cost units. Activity based approaches to Cost Analysis.

Principles applied to job, process and service type industries.

Conversion cost and accounting for material losses

Problems of common cost

Joint products, by products

Activity based costing – use of cost drivers and activities

Objectives of budgetary control, evaluation of budget systems

Al types of budgets including:

Fixed and flexible budgets, cash flow budgets, use of variances,

Quantitative aids to budgeting, use of computer based models,

Behavioural implications of budgeting and budgetary control.

Theory and practice. Contribution concept.

Break even analysis. Profit/volume ratios. Margin of safety. Profit graphs.

Relevant costs, limiting factors, including problems requiring elementary linear programming solutions, decisions about alternatives, such as make or buy, and shutdown.

Types of standards – (basic, normal, current, expected and ideal standards)

Setting standards, Variance analysis, two, three and four variance analysis, treatment and utilization of variances.

Significance and relevance of variances, planning and operational variances. Behavioural of implications.

Patterns of cost behaviour

Influence of volume of activity

The preparation of profit reconciliation statements using either standard marginal costing or absorption costing principles.

Functional and divisionalised organizational structure

Profit centres and investment centres

Advantages and disadvantages of divisionalization

Return on Investment

Residual Income

Transfer pricing in divisionalized companies – transfer pricing manipulation and tax havens.

Decision making under:- Risk, uncertainty, centainty

Probability distributions and expected value

Network Analysis / Critical Path Method (CPM)

Project Evaluation and Review Techniques (PERT)

Cost reduction schemes

Back flush accounting

Through put Accounting

Decision Tree Analysis

Use of cost information for pricing decisions under conditions of uncertainty

(Statistical replacement methods i.e. vehicle replacements, other replacements, inventory control

models, transportation models).

Operating statements, variance reports, ratios, inter-firm and inter-divisional or departmental comparisons using such methods as tables and graphs.

*           In addition, candidates will be expected to make comments concerning the non-quantitative aspects of the decision being made. Candidates may also be required to use knowledge gained in other subjects of the course.


Candidates may make use of hand-held, self-powered, silent, non-programmable calculators but

intermediate working steps must be shown

Three hour examination paper

Lucey T (2004) Costing 6th Edition Bookpower London
Drury C (2004) Management and Cost Accounting (6th Edition) Thompson Learning London

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