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AD-3: Introduction to Management Accounting
Introduction to Management Accounting
This course focuses on the prerequisite and use of management accounting information for planning, control and decision making. The course encourages an understanding of the management accounting function within an organization by taking a business value sequence perspective, techniques to allocate costs to products and services and mechanism of price determination based on cost. The process of budgeting (operational and financial) and standards as an aid to management in planning and controlling business activities is explored. It will help students to learn about effective performance management system, selection of performance measures and how to calculate variance in actual vs planned/standards results. Students will learn how to analysis data for financial decision making and analysis of data using spread sheet techniques.
By the end of the course, students will be able to understand:
- Management Accounting and Management Information Systems
- How to calculate cost of products, provision of services and contracts.
- How to use costs in determining sale prices.
- Selection of budgeting approaches, methods and techniques for budgets preparation.
- Performance Management System and features of effective performance management systems.
- Selection of performance measures and variance analysis between actual vs standard or planned results.
- Analysis of relevant data to be used in effective management decision making.
- How management information can be used to achieve organizational goals and sustainable performance.
- How financial information can be analyzed using spreadsheets.
Management Information-Introduction and Application
- Data and Information, sources of data
- Introduction to Management information
- How to prepare and present management reports & management information required for decision making
- Ethical matters in preparing and presenting management information and reports.
Cost, costing methods and profit calculation
- Introduction to cost, costs classification and Costs behavior
- Different costing methods used to determine cost of products and services
- How to calculate sales prices and profit using costing information
- Calculation of transfer pricing for internal customers.
- Introduction to performance management and performance measurement
- Forecasting/Projections and its use in controlling and performance measurement
- Use of performance measurement in measuring performance of managers, functions and eventually of organizations.
- Consideration given to the financial and non-financial performance measures used in organizations to meet objectives.
Budgeting, Variance Analysis and Break Even analysis
- Understanding of budgets and budgeting techniques
- What are the tools required for budgets preparation
- Calculation of Variance analysis to compare budgeted and actual outcomes
- Breakeven analysis and limiting factors for the allocation of cost and other resources.
Working Capital, Cash cycle and Investment Appraisal
- What is working capital and cash cycle, elaborate its elements?
- What are different techniques for investment appraisal?
- Understanding and calculation of investment techniques to select which project is best.
Use of Spreadsheet for Management Information
- How to use and create effective spreadsheets for management information
- Use of financial functions and formulas for data and information
- Calculation of Pay-back period, NPV, ROI and investment appraisal using excel spreadsheets.