1

The International College of Economics and Finance

Syllabus for the Management Accounting.

Lecturer and Class teacher: Polina V. Vershinina

Course description:

The Management Accounting is a full year course for the 3-rd year ICEF students. This is a

course for the students specialized in the area of Accounting and Management. The course has a

Financial Accounting course as a prerequisite. The course is taught in English and finally examined by

the University of London international programme.

The course is focused on the process of making management decisions based on the

information provided by business – about its transactions and performance. This information can be

collected, processed and presented in certain way to assist in this process. Among the topics covered

are the calculation of cost per items for making profitability decisions for different types of business

activities or business units, pricing decisions, choosing from alternative options while deciding on

additional costs or expenses or additional sales opportunities within limited production capacities –

what issues the cost accounting cares about. Special attention is paid to the application of the cost

accounting methods to merchandising and service organizations. Cost analysis has a significant

influence on the pricing decisions and transfer prices. Also a large part of the course is devoted to the

planning and budgeting process in the company as a management tool and variances analysis. The

discussion of modern methods of performance management such as Balanced Score Card brings a

special value of the program. The first part of the course is devoted to the Cost analysis, the second

part – covers aspects of making managerial decisions, including the cost-volume-profit analysis,

break-even calculation and capital projects.

Course Objectives

The students get in the course the knowledge about modern methods and techniques used in the

process of management accounting and analysis of costs in a business. They should be able to apply it

in different business situations where they need to calculate costs for products or make a decision

about a price. The students should understand major types of decisions, that should be made in the

process of formulating and implementing business strategy, they should have a general knowledge

about major factors, influencing these decisions, course-effect relationships and about major tools of

planning, analysis and control of results, the usage of which significantly influences the success of the

strategy implementation.

This course is designed to equip students with the knowledge of concepts and the ability to apply

techniques of management accounting, in order to be able to contribute to the success of a firm.

Management accounting has evolved from being purely concerned with the recording and

measurement of costs, to supporting decision makers in their daily and strategic decisions. For this

reason non-financial information is included in management accounting reports, where it is used in

combination with financial information to construct information that can unveil the contribution of

each division, function, activity, process and procedure to the strategic achievements of a firm.

Learning outcomes

At the end of this course, and having completed the Essential readings and activities, students should

be able to:

• critically evaluate the uses of managerial accounting information for strategic decision making in

various business contexts

• select, devise and apply different types of cost allocation and explain their different roles for

supporting strategic managerial decisions

2

• design and prepare budgets and explain their use in strategic planning and control

• design and use variances to support feedback analysis and strategic control

• discuss various approaches to performance measurement and control in various types of

organisations, and devise and evaluate simple indicators of performance

• discuss the changing role of management accounting.

The Methods

The following methods and forms of study are used in the course:

- lectures (2 hours a week)

- classes (2 hours a week, that are devoted to tasks and business cases solving

- home assignments for each topic consisting of theoretical and applied parts

- teachers’ consultations

- self study, which can be conducted with the course materials and in a computer room, making

home assignments using Excel, with ICEF, UoL, and other course materials through the Internet and

ICEF information system.

In total the course includes: 62 hours of lectures, 62 hours of classes.

Main Reading:

The Fifteenth edition of textbook “Cost Accounting: A Managerial Emphasis” by Charles T.

Horngren, Srikant M. Datar and Madhav V. Rajan 15th ed.) (1) is the main textbook for the course.

The Students also may use the 6th

edition of Managerial and Manufacturing Accounting by Colin

Drury. The University of London Study Guide (2), Examination papers and Examiners’ Reports are

widely used in the course. There is an extensive list of supplementary reading n the Study Guide that

can be used for more detailed study for particular topics.

The Virtual Learning Environment (VLE, The University of London, I-2), and the ICEF Information

System (I-3) are the main information sources for course studies providing various materials (slides,

videolectures, lecture notes, former exam papers, home assignments, etc).

1. Horngren, C.T., S.M. Datar and M.V. Rajan Cost accounting: a managerial emphasis.

(Harlow: Pearson Education, 2011) fourteenth edition (international) [ISBN 9780273753971].

2. Drury, C. Management and cost accounting. (London: Cengage, 2011) seventh revised

edition [ISBN 9781408032138].

Supplementary reading:

1. Ray Proctor, Decision Making and Performance Improvement; 4th Edition, May 2012,

Paperback, 648 pages

ISBN13: 9780273764489

ISBN10: 0273764489

2. Robert Kaplan, Anthony Atkinson, Advanced Management Accounting: Pearson New

International Edition, 3rd Edition, Jul 2013, Paperback, 816 pages

ISBN13: 9781292026596

ISBN10: 1292026596

3. Karen Braun, Wendy Tietz, Managerial Accounting: Pearson New International Edition, 3rd

Edition, Aug 2013, Paperback, 944 pages

ISBN13: 9781292022987

3

ISBN10: 1292022981

4. Tom Groot, Frank Selto, Advanced Management Accounting, Feb 2013, Paperback, 472 pages

ISBN13: 9780273730187

ISBN10: 0273730185

5. Robert Simons, Performance Measurement and Control Systems for Implementing Strategy

Text and Cases: Pearson New International Edition, lJul 2013, Paperback, 696 pages

ISBN13: 9781292020938

ISBN10: 1292020938

Grade determination:

The students sit two mid-term written exams in October and in March, first semester written exam in

December, and University of London International programme exam in May. October and

December exams include multiple choice and free response parts (both computational questions and

essay type questions). March and May exams are free response (open questions) exams. The first

semester grade is determined as follows: December exam grade gives 50% of the grade, October

exam - 30%, and 20% is given for home assignments. In the final course grade the University of

London exam grade gives 40%, the first semester grade gives 30%, and 30% is given for the second

semester (20% - for March exam and 10% for home assignments).

The Course Outline.

1. Managerial Accounitng. Costs classification.

Definition of the managerial accounting, goals and objectives. Financial and managerial accounting -

comparison. Decision making process. Cost classification: direct\indirect, fixed\variable,

manufacturing( material, labour, overhead) and other (administrative, sales, financial). Inventoriable

and period costs.

Chapter 1 and 2, (Horngren), Chapter 1 and 2 (Drury).

2. Cost-Volime-Profit Analysis.

Break-even, contribution margin for a particular product, making decisions about additional costs,

increasing sales price, target pricing and target operating income, operational leverage.

Chapter 3, (Horngren), Chapter 8 (Drury).

3. Job costing.

Difference between job costing and process costing. Main characteristics and applications. Allocation

of indirect costs in the job costing system – normal costing, using general ledger accounts .

Chapter 4, (Horngren), Chapter 4 (Drury).

4. ABC-costing and ABC-management.

Undercosting and overcosting of product, reasons for refining the costing system. Principles of

Activity-Based Costing. Considerations in implementing ABC-costing. ABC-management. Activity-

Based Costing and Department Costing System.

Chapter 5 (Horngren), Chapter 10(Drury).

4

5. Planning and budgeting.

Budgets and the Budgeting Cycle. Strategic plans and operating plans. Developing an operating

budget. Different budgets. Human aspects, organizational aspects and responsibility accounting.

Chapter 6 (Horngren), Chapter 15 (Drury).

6. Analysis of variances.

Management by exception and the use of variances. Static and flexible budgets. Standard-costing for

cost calculation, analysis of variances. Direct materials Variances, Direct Labour Variances, Variable

Overhead Variance, Fixed Overhead Variance, Sales and Gross Margin Variance, Sales Volume and

production Volume Variances.

Chapter 7 and 8 (Horngren), Chapter 18 and 19(Drury).

7. Inventory costing system.

Marginal (variable) costing and absorption costing. Influence of the calculation method on the cost

of production, cost of inventory and measuring of profit. Through-put costing.

Chapter 9 (Horngren), Chapter 7 (Drury).

8. Cost behavior.

Methods of determination how cost behave (high-low method, regression and other methods).

Chapter 10 (Horngren)

9. Measuring relevant costs and proceeds for decision making.

Special decisions about pricing: one-time only special orders, short-term and long-term orders,

product mix decisions with capacity constraints. Decisions on equipment replacement: irrelevance of

past costs. Insourcing or outsourcing decisions. Buy or make decisions. Bottlenecks, Theory of

Constraints, Throughput-Margin analysis. Customer profitability and relevant costs.

Chapter 11 (Horngren), Chapter 9 (Drury).

10. Pricing decisions.

Time horizon and pricing. Time horizon and pricing. Factors affecting pricing decisions. Short-run

and long-run considerations. Target costing and target pricing. Cost plus pricing. Life-cycle pricing

and budgeting. Transfer pricing. Decentralization.

Chapter 12, 22(Horngren), Chapter 11, 18 and 19(Drury).

11. Cost allocation

Allocation of direct and indirect costs. Accounting for overheads. Allocating manufacturing overheads

to cost centres. Allocation of support department costs. Methods of allocation. Purpose of allocation.

Customer profitability analysis. Customer cost hierarchy.

Chapter 14 and 15 (Horngren)

12. Process costing.

Accounting for No Beginning and Zero Ending WIP. Accounting for Zero Beginning and some

Ending WIP. Accounting for Some Beginning and some Ending WIP. Weighted-Average and FIFO

methods. Transferred-In costs.

Chapter 17, (Horngren), Chapter 5 (Drury).

5

13. Strategic Cost Management.

Strategy and Strategic profitability Analysis, using financial and non-financial key performance

indicators in business, Balanced ScoreCard, Analyzing Operating income, Management of

Processing Capacity. Performance measurement. ROI, EVA.

Chapter 13, 19 and 23 (Horngren), Chapter 18 and 19(Drury).

14. Inventory management.

Inventory management in Retail: Economic-Order-Quantity, Just-in-Time Purchasing. Inventory

management in Production: Materials Requirements Planning and Just-In-Time Production.

Chapter 20(Horngren)

15. Capital Budgeting.

Calculation of NPV (net present value), IRR (internal rate of return), payback period и accounting

rate of return. Evaluation of investments.

Chapter 21(Horngren), Chapter 13, 14 (Drury).

Distribution of hours for topics and types of work

No Topics titles Contact hours

Lectures Classes

1. Managerial Accounting. Costs classification. 4 4

2. CVP analysis 2 2

3. Job costing. 4 4

4. ABC-costing and ABC-management. 2 2

5. Planning and budgeting. 2 2

6. Analysis of variances. 4 4

7. Inventory costing system 4 4

8. Cost behaviour 2 2

9. Measuring relevant costs and proceeds for decision making. 4 4

10. Pricing decisions. 4 4

11. Cost allocation 4 4

12. Process costing 4 4

13. Strategic Cost Management. 6 6

14. Inventory management. 2 2

15. Capital budgeting 2 2

Revision 12 12

Total 62 62