Module Code and Title:   ACT305 Management Accounting I

Programme:                          Bachelor of Commerce

Credit:                                    12

Module Tutor:                       Madhav Verma, Arindam Ghosh, Laxmikanth Dhakal, 

                                               Dilli Ram Sharma, Ritu Barna Adhikari , Tshering Pemo, Nawang Yangden 

Module Coordinator:            Arindam Ghosh

General objective: The objective of the module is to create an understanding of the concepts of Management Accounting and their applications in managerial decision making. The study of Management Accounting will develop the students of Accounting Major the appropriate attitudes in planning, controlling and decision making which are critical skills needed to effectively manage businesses in a dynamic environment. The intended outcome is to develop those skills among students so that they can understand and appreciate the importance of quantitative as well as qualitative characteristics in the decision making process.

Learning outcomes – On completion of the module, students will be able to:

1. Explain the need, importance and role of Management Accountants in an organization.
2. Describe the key concepts like Contribution, P/V ratio, Margin of safety, Angle of incidence, Limiting factor. 
3. Prepare different types of functional, fixed and flexible budget statements. 
4. Utilize variable costing techniques and differential analysis in business decision-making such as make or buy, accept or reject.  
5. Apply standard costing method and investigate and interpret the cause for variances.
6. Prepare various Budgets for organizations performance and appraise for the same 
7. Use Break Even Analysis to determine Break Even Point and for profit planning.
8. Explain the importance of Responsibility Accounting 
9. Discuss how non-financial information will be used for making strategic decisions.

Teaching and Learning Approach:

Assessment Approach:

1. Assignment and Presentation (10%): This will cover the chapter on “Budgeting for Planning & Control”. This will be divided into two parts:
   1. Part I – Assignment (Group, 4%) 
   2. Part II – Presentation (Individual, 6%)

Part I – Assignment (Group, 4%) 

Group case study will be assigned. They will have to prepare an analysis report. The report will be maximum 5 pages (1.5 spacing). The assessment criteria for the report is given below:

1. Introduction (20%). 
2. Findings (30%). 
3. Analysis (40%).
4. Recommendations (10%).

Part II – Presentation (Individual, 6%)

Students will prepare individual presentation for maximum of 5 minutes each. It will be assessed on the following criteria:

1. Presentation skills and preparation (30%). 
2. Confidence (10%). 
3. Contents and analysis of the review (50%).
4. Ability to answer questions (10%)

2. Problem Solving (15%): Problem solving will account for all the business situation based application questions for the whole syllabus. The marks will be distributed according to the number of business problems solved under each unit of the syllabus.
3. Class tests (15%):  Two different class tests will be taken. Class test will be mostly problem solving and is planned for 50 minutes each. It will cover chapters on “Managerial Decision Making”, “Strategic Decision Making” and “Standard Costing”.
4. Quiz (10%):  Two different quizzes will be taken. Quizzes will be mostly objective type questions for 20 minutes. It will cover chapters on “Introduction” and “Responsibility Accounting”.
5. Mid-semester exam (20%): The mid-term examination comprises of the portion covered from the syllabus that would suffice to test the students both conceptual as well as practical concepts for analysis and would enable them improve their skills in the relevant area of study.

6. Semester-End Examination: Portion of Final Marks: 30%

The module will have a semester-end exam for 2 hours covering the entire syllabus. The question will be divided into two parts – Part A (carrying 40% of the exam weightage) will be mostly of short answer including objective questions. Part-B (carrying almost 60% of the exam weightage) will be mostly of essay type or an extended response to the given question. This part of the question requires students to apply, analyse, and evaluate or construct knowledge and skills. Cases will also be used to test the levels of knowledge.

Pre-Requisites: None

Subject matter:

1. Introduction                                                                                       
   1. Meaning and definition of Management Accounting. 
   2. General purpose Financial Statements and Special Purpose Financial Statements. 
   3. Relationship of Management Accounting to Financial Accounting.
   4. Nature of Management Accounting and its objectives. 
   5. Role of Management Accountants. 
   6. Limitations of Management Accounting.

1. Managerial Decision Making: Cost – Volume – Profit Analysis
   1. Concept of cost-volume-profit analysis
   2. Techniques of CVP Analysis - Contribution margin, Break-even analysis, profit- volume analysis.
   3. Role of CVP Analysis- product pricing, sales mix.
   4. Margin of Safety, Angle of Incidence, BEP chart, P/V chart. 
   5. Limitations of Break-even point.  

1. Strategic Decision Making                                                              
   1. Variable cost and differential costs analysis as aids in making decision- 
   2. Fixation of selling price. 
   3. Exploring new market. 
   4. Make or buy decisions.
   5. Product mix decisions. 
   6. Operate or shut down decisions. 
   7. Sell or process further decisions.

1. Standard Costing: A Managerial Tool                               
   1. Introduction, concept of Standard Cost and Standard Costing.
   2. Standard Costs and Estimated Costs –Comparison
   3. Advantages and Limitations of Standard Costing.
   4. Variance analysis- favorable and unfavorable variances. 
   5. Variance for each elements of cost-Material variances, Labour variances, Overhead variances, 
   6. Reporting of variances and Disposition of variances.

1. Budgeting for Planning & Control
   1. Introduction, meaning and concept of budget and budgetary control, 
   2. Objectives of budgetary control Forecast and Budget. 
   3. Advantages and Limitations of Budgetary control.
   4. Classification of Budgets -Functional budgets, Master budget, 
   5. Fixed Budget and flexible budget. 
   6. Zero base budgeting and performance Budgeting.

1. Responsibility Accounting (6 Hours)
   1. Introduction, Meaning and definition of Responsibility Accounting, 
   2. Responsibility Centre, 
   3. Measurement of Divisional performance, 
   4. Techniques of measurement of Divisional performance.

Reading List:

1. Essential Reading
   1. Charles, T., Gary, L., Jeff, O.&Dave, B. (2016). Introduction to Management Accounting, Pearson 
   2. Charifzadeh, M. &Taschner, A.   (2017). Management Accounting and Control: Tools and Concepts in a Central European Context. UK, Wiley. 
   3. Karen, W. &Wendy, M. (2016). Managerial Accounting, Pearson
   4. Ronald, W.H. (2005).  Managerial Accounting: Creating value in a dynamic Business Environment, Tata Mc Graw- Hill 

1. Additional Reading
   1. Birt, J., Chalmers, K., Byrne, S., Brooks, A., & Oliver, J. (2012). Accounting: Business Reporting for Decision Making. 4^th edition, John Wiley & Sons, Australia
   2. Hongren, Sundem, Stratton, Burgstahler & Schatzberg (2013). Introduction to Management Accounting, 16th edition, Pearson Education, New Delhi, INDIA.
   3. Maheshwari, S.N., Maheshwari, Sharad K & Maheshwari, Suneel K. (2012). A Textbook of Accounting for Management, Vikas Publishing, India
   4. Anne Loft (1986). Towards a critical understanding of accounting: The case of cost accounting in the U.K., 1914–1925. Accounting, Organizations and Society, Vol. 1(2), pp. 137-169
   5. Ellul, A. , Jotikasthira, C. , Lundblad, C.T. & Wang, Y. (2015). Is Historical Cost Accounting a Panacea? Market Stress, Incentive Distortions, and Gains Trading. The Journal of American Finance Association. DOI: 10.1111/jofi.12357

Date: May, 2020