Cost & Management Accounting
Learning objectives: Participants at the end of this module should master the basic financial statement analysis techniques and the basic management accounting concepts. In the first part, basic tools of financial statement analysis will be presented in order to assess the financial position of a company. The second part will deal with topics such as cost-volume-profit analysis, product costing, Activity Based Costing and variance analysis.
- The Value chain and management accounting;
- Major purposes of management accounting systems;
- Cost objects, cost drivers, classification of costs; cost concepts in an actual decision-making context; the major assumptions underlying the definitions of variable and fixed costs.
- effects of cost accounting methods on perceived product profitability, and the use of cost data in operational and marketing decisions; Cost-volume-profit analysis; Break-even analysis;
- Traditional costing systems; job costing overview for manufacturing cost;
- Product-cost cross-subsidization and cross –subsidization
- Reasons of obsolesce of traditional costing systems, refining a costing system;
- Principles of Activity-based costing; critical evaluation of ABC/ABM model: Activity overview; Cost hierarchies; Process overview; The ABC model;
- Comparison of flow of cost under variable and absorption costing; variance analysis;
- Comparative income effect of costing methods; variances between actual and standard costs; variances for assigning responsibility and examining the variances’ causes.
- Responsibility accounting: budgets; budgets cycles; budgets assumptions and actual results; comparison of actual and budgets;
- Controllability: responsibilities centres, types efficiency and effectiveness; profit centres and measuring profitability;
- Types of profitability measures for measuring management performance: business units as profit centres; decentralization and performance measurement;
Reference textbook: Horngren C.T. and Sundem G.L. (1960), «Introduction to Financial Accounting», 8th edition, 1990, New Jersey, Prentice Hall. Horngren C.T. and Foster G., «Cost Accounting a Managerial Emphasis», 7th edition, 1991, New Jersey, Prentice Hall. Drury C., «Management and Cost Accounting», 3rd edition, 1991, London, Chapman and Hall.