This module provides an understanding of key issues and applied methodologies relating to management accounting frameworks used by managers when faced with making financial decisions in the context of the engineering business environment. The focus is on information for cost management, budgetary control, and short and longer term financial decision making. That information enables managers to plan for and subsequently control operations. It examines the blend of financial analysis and managerial judgment required to make sound decisions. In particular there is an emphasis on issues in overhead cost recovery; contribution costing and CVP analysis; costing and pricing in a competitive environment, including activity based costing (ABC); incremental cash flows and their role in relevant costs for decision making; investment appraisal techniques; budgetary control, variance analysis, and standard costing.
Upon successful completion of the module, a student will be able to:
- Understand the roles of profit, cash, and ‘cost’ in decision making
- Understand and apply differing definitions and interpretations of the term ‘cost’
- Identify issues in overhead cost recovery and understand their impact on decision making, and apply ABC
- Understand the nature and uses of contribution and CVP analysis, apply those ideas to break even analysis, and decisions associated with scarce resources, limiting factors, and pricing
- Understand the nature Incremental cash flows and their role in relevant costs for decision making
- Undertake investment appraisal decisions, taking account of the issues of risk and cost of capital, applying the ideas of accounting rate of return (ARR), payback, net present value (NPV), internal rate of return (IRR), expected net present value (ENPV), profitability indices (PIs), Risk Premiums, WACC
- Understand the nature and purpose of budgetary control, and prepare budgets
- Understand the application of budgetary variance analysis, particularly in the context of standard costing
- Full costing: absorption
- Contribution costing; CVP analyses
- Activity Based Costing (ABC);
- Relevant costs for decision making
- Capital Investment appraisal
- Budgeting for control
- Standard costing
70% for unseen 2-hour exam in the summer term; 30% for coursework. Coursework comprises one individual assessment carrying 10% and one group-based (2 members in each team) case study analysis carrying 20%.
Current students should refer to Moodle for specific details of the current year’s assessment.
Management Accounting for Decision Makers with MyAccountingLab access card, 8th edition, by Peter Atrill & Eddie McLaney, 2015, Pearson ISBN-10: 1292072539 • ISBN-13: 9781292072531