UNIT 14: ADVANCED MANAGEMENT ACCOUNTING Unit code:

Transcript:UNIT 14: ADVANCED MANAGEMENT ACCOUNTING Unit code::
UNIT 14: ADVANCED MANAGEMENT ACCOUNTING Unit code: Y/508/0537 Credit value: 15 UNIT 14: ADVANCED MANAGEMENT ACCOUNTING Learning Outcome 2 : Evaluate the use of management accounting techniques to support organisational performance THE BASIC SYLLABUS 1 Analyse the purpose for developing and presenting financial information. 2 Evaluate the use of management accounting techniques to support organisational performance. 3 Analyse actual and standard costs to control and correct variances. 4 Evaluate how a changing business environment impacts on management accounting. LEARNING OUTCOMES LO 2:Evaluate the use of management accounting techniques to support organisational performance P2: Evaluate the use of different accounting microeconomic techniques in application to supporting organizational performance . OVERVIEW Management accounting is the sourcing, analysis, communication and use of decision-relevant financial and non-financial information to generate and preserve value for organisations. Accounting information is relevant to managers, and it can be processed and analysed for effective managerial decision-making. By examining accounting information that is extensively used across three key managerial functions of planning, decision-making and controlling. COST ANALYSIS Cost analysis (also called economic evaluation, cost allocation, efficiency assessment, cost-benefit analysis, or cost-effectiveness analysis by different authors). At the most basic level, cost allocation is simply part of good program budgeting and accounting practices, which allow managers to determine the true cost of providing a given unit of service (Kettner, Moroney, & Martin, 1990). COST ANALYSIS Cost allocation, cost-effectiveness analysis, and cost-benefit analysis represent a continuum of types of cost analysis which can have a place in program evaluation. They range from fairly simple program-level methods to highly technical and specialized methods. COST ANALYSIS Cost analysis is a comparison of costs. Costs used to prepare financial statements are not the same as those used to control operations. Costs may be controllable or non-controllable and are subject to time periods and constraints. For example, controllable costs are those the manager may authorize. COST ANALYSIS WHAT COST ANALYSES CAN TELL YOU: Cost analyses can provide estimates of what a program's costs and benefits are likely to be, before it is implemented. "Ex-ante" or "before the fact" cost analyses may have to be based on very rough estimates of costs and expected benefits. However, if a program is likely to be very expensive to implement, very difficult to "un-do" once it is in place, or very difficult to evaluate, even a rough estimate of efficiency may be quite valuable in the planning stages (Rossi