T2 : FM-02: Management Accounting

Faculty: Prof. (CA) Parul Shrivastava

Course Objective:

Management accounting is defined as-“the presentation of accounting information in such a way as to assist
management in the creation of policy and in the day to day operation of an undertaking”.

The main aim of managerial accounting is to improve the efficiency and quality of operations by
providing program owners and all others with suitable and applicable cost based performance information
to permit for nonstop improvement in distributing the output to the stockholders.

Benefits of managerial accounting:

• Determining performance
• Dropping or managing costs
• Examining the prices for products and services
• Choosing to approve, change or suspend a plan or action
So, for any business unit starting from the smallest business activity to the largest multinational business to
be succeeded requires the use of managerial accounting concept and practices.
The Course will broadly focus on
 Concept of Cost and Management accounting
 Relevance of Cost Accounting
 Material, Labour and Overhead costing
 Absorption, Process and standard Costing
 Price Determination and Managerial Decision making
Course prerequisite:

The course is practice oriented, which will require a basic knowledge of financial accounting and business
mathematics.

Pedagogy:

The Course is a practical subject which requires maximum student participation, a number of case studies,
caselets, live exercises will be discussed to enable them to relate the concept of Cost Accounting in the
managerial decision making process and to understand how management accounting techniques can be
applied in the real business situation. Readings, Case analysis, and Problem solving will be used to reinforce
the concept taught.

 
  

Scheme of Evaluation:

Assignment: 20%

Presentation: 10%

Class Performance: 10%

Attendance: 10%

Term End Exam: 50%

Text and Reference Book:

T1: Management Accounting, Khan & Jain, 4th Edition, Tata Mcgraw Hill Company

R1: Cost Accounting (Theory and Practice), Bhabhatosh Banerjee, 12th Edition, Phi Learning Private
Limited.

Module-I

Title COST ACCOUNTING

Contents Evolution of accounting as a discipline; a relativist approach to the development of cost

and management accounting.

Text T(1)-chapter 1

References
R(1)-chapter 1
Assignment/ca 1. Students will find out a company which maintains cost records and then
se extract all the cost information given in the annual report of that
analysis/quiz/li company.(For this purpose, the students will be divided into groups of 5
ve exercise students each)
2. Exercises on basics of cost accounting

Cases for Sycon technologies ltd.

classroom
discussion

Presentations 1. 3 students will elaborate on the above case

2. 3 students will present on definition of Management accounting
3. 3 students will compare financial accounting to management accounting
4. 3 students will elaborate on Importance of Management Accounting
5. 3 students will present on Reading(2)

Readings
1. The management of accounting numbers: case study evidence from the crash of

 
  

an airline.
By: jorissen, ann; otley, david. Accounting & business research, 2010, vol. 40 issue 1, p3-38,
36p

2. Cost accounting versus cost bookkeeping.

By: taggart, herbert f.. Accounting review, apr51, vol. 26 issue 2, p141, 11p

3. Reference material I
Web resources 1. Blog.accountingcoach.com/financial-accounting-management-accounting/ -
2. www.accountingformanagement.com/financial_accounting_vs_managerial_ac
counting.htm
3. www.mbanotesworld.in/.../cost-accounting-versus-management.html
No. Of hours 5 hours of interactive teaching and 3 hours of presentation.

Module-II

Title COST ACCOUNTING IN PRICE DETERMINATION

Contents Cost and Management accounting, distinguished from financial Accounting ;

objectives of cost Accounting and Management Accounting ; Relevance of Cost
accounting in the context of price determination; forecasting and planning and
strategic decisions.

Text T(1)-Chapter 2

References
R(2)-Chapter 7
Assignment / case 1. Case analysis- by each student individually –Davey Brothers Watch Co.
analysis / quiz / 2. Caselets on Price determination
live exercise 3. Quiz
Cases for classroom 1. Steel ways engineering company Ltd.
discussion 2. Sundaram & Company.
 
Presentations 1. 3 students on the case above
2. 3 students on relevance of Cost accounting in price determination.
3. 3 students on how management accounting can be used for strategic
decision making.
4. 3students on reading (2)
5. 3 students on reading (3)
6. 3 students on reading (5)
7. 3 students will explain the difference between COGS and COS
8. 3 students will explain Cost sheet

Readings
1. Getting from estimate to budget.

 
  

by: kennedy, donald a.. Industrial management, nov2009, vol. 51 issue 6, p25-30

2. Price forecasting and strategic planning: the case of petrochemicals.

By: stobaugh, robert b.; townsend, phillip . Journal of marketing research (jmr), feb75,
vol. 12 issue 1, p19-29

3. Cost-oriented pricing: a realistic solution to a complicated problem.

by: brooks, douglas g.. Journal of marketing, apr75, vol. 39 issue 2, p72-74

4. Optimal forecasting incentives.

by: osband, kent. Journal of political economy, oct89, vol. 97 issue 5, p1091

5. Sales volume forecasting: a comparison of management, statistical, and

combined approaches.
by: walker, kenton b.; bain, craig f.. Journal of management accounting research,
fall89, vol. 1, p119
Web resources 1. www.scribd.com/doc/18740959/managementaccountingnote
2. swww.bized.co.uk › Learning Materials
3. www.imanet.org/...and.../management_accounting_quarterly.aspx
4. www.zenwealth.com/.../FF/FinancialForecasting.html

No. Of hours 8 hours of interactive teaching and 3 hours of presentation.

Module-III

Title ABSORBTION COSTING

Contents Cost & Management Accounting- Control Techniques, Nature of Costs, Cost
Units, Cost Centers, Elements of Costs, a broad overview of costing methods and
techniques, Total Absorption costing.

Text T(1)-Chapter 3,4,5

References
R(1)-Chapter 8,9,10,11 and 15
Assignment/case 1. Organizational Visit: Calculation of % of material, labour, and overheads
analysis/quiz/live of a company/firm .(12 groups of 5 students each)
exercise 2. Cost sheet preparation (exercises)
Cases for classroom P.E.T. Chemical Company.
discussion

Presentations 1. 2 students from each group for O.V. will present on the report
prepared on overhead allocation (24 Students)
2. 3 students on the case above.

 
  

3. 3 students will elaborate on elements of cost.

4. 3 students on Cost unit Vs. Cost Centre.
5. 3 students on Profit Centre vs. Investment Centre.
6. 3 students on Reading (2)
Readings
1. Profit centers, single-source suppliers, and transaction costs.
by: walker, gordon; poppo, laura. Administrative science quarterly, mar1991, vol.
36 issue 1, p66-87

2. Cost allocation.
by evans, hugh; wall, deborah. Financial management (14719185), nov2008, p39-
40,

3. Reference Material II

Web resources 1. www.cimaglobal.com

2. www.cmaindia.net
3. www.icwai.org
4. www.hbs.edu/research/pdf/07-030.pdf
5. www.wisegeek.com/what-is-responsibility-accounting.htm

No. Of hours 8 hours of interactive teaching and 3 hours of presentation.

Module-IV

Title OVERHEAD ALLOCATION AND PROCESS COSTING

Contents Accounting for material, Accounting for Labour, Accounting for Overhead,
overhead allocation, product costing, process costing.

Text T(1)-chapter 11

References R(1)-chapter 14 and 15

Assignment/case 1.Assignment: Product Pricing :A Product will be given to the students

analysis/quiz/live along with the details of expenditure, students have to find out the price of
exercise the product (by using Absorption costing)(For this purpose the students
will be divided in groups of 5 each)
2. Quiz

Cases for 1. Hind General Corporation Ltd.

classroom 2. S.K.Industries Ltd.
discussion 3. Seers Can Company Ltd.

 
  

Presentations 1. 3 students on Case(1)

2. 3 students on Case(2)
3. 3 students on Reading (1)
4. 3 students on Reading (2)
5. 3 students on Process Costing.
6. 3 students on Absorption Costing.
Readings
1. Cost allocation for capital budgeting decisions.
by: baldenius, tim; dutta, sunil; reichelstein, stefan. Accounting review, jul2007, vol.
82 issue 4, p837-867

2. Overhead allocation: a cautionary tale!

by: luther, robert; robson, neil. Accounting education, nov2001, vol. 10 issue 4, p413-
419

3. Process costing and management accounting in today's business

environment.
by: dosch, jennifer; wilson, joel. Strategic finance, aug2010, vol. 92 issue 2, p37-43

4. Reference material II
Web resources 1. www.scribd.com/doc/18740959/managementaccountingnotes
2. www.icwai.org
3. www.clientsandprofits.com/support/faqs/faq_oh_allocation.html

No. Of hours 10 hours of interactive teaching and 3 hours of presentation.

Module –V

Title MANAGERIAL DECISION MAKING

Contents Apportion and Absorption Costing ,method for separation of costs; Cost- Volume-
Profit Analysis, Managerial Decision Making, Overview of standard costing, Budgetary
control etc., Recent advances like Activity Based costing.

Text T(1)-Chapter15 and 16

References R(1)-chapter 17,22 and 23

Assignment/cas 1. Assignment – Managerial Decision Making- Make or Buy decision for a

e component required by a refrigerator manufacturing Company (will be done
analysis/quiz/liv by each student individually)
e exercise 2. Quiz

 
  

Cases for 1. SFCL (profit planning)

classroom 2. Jay Engineering manufacturers (ABC and Product Pricing)
discussion 3. HydeSign Leathers Ltd. (Cost Variance Analysis)

Presentations 1. 3 students on the Case (I) above.

2. 3 students on Reading (1)
3. 3 students on Reading (3)
4. 3 students on CVP Analysis
5. 3 students on Activity Based Costing
6. 3 students on the Case (II)
7. 3 students will explain how to take a make or buy decision.
8. Percentage of sales method of forecasting.
Readings
1 The budgetary
By: hanson, ernestcontrol function.
i.. Accounting review, apr66, vol. 41 issue 2, p239-243

2 Cost-volume-profit analysis incorporating the cost of capital.  

By: kee, robert. Journal of managerial issues, winter2007, vol. 19 issue 4, p478-493

3 Cost-volume-profit analysis under conditions of uncertainty.

By: jaedicke, robert k.; robichek, alexander a.. Accounting review, oct64, vol. 39 issue 4, p917

Web resources 1. www.scribd.com/doc/18740959/managementaccountingnotes

2. www.icwai.org
3. www.accountingformanagement.com/standard_costing_variance_analysi
s.htm

No. Of hours 10 hours of interactive teaching and 3 hours of presentation.