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Management Accounting for Non-specialists, 3^rd Ed.

Publisher: Pearson, 2002 , 403 pages

ISBN: 0-273-65591-4

Synopsis:

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Accessible, learner-friendly and jargon-free, this best-selling text in management accounting is the ideal starting point for non-accounting students. Clear and concise it not only arms the reader with the basic principles of the subject but actively encourages students to build on these through an 'open-learning' approach, involving them in various questions and activities along the way.

The third edition has been thoroughly updated and revised improving existing features and expanding content.

Features include

New Chapter 11 on strategic management accounting
Added material on management accounting in practice
An updated and revised selection of end-of-chapter, self-assessment, and review questions.
Improved glossary of technical terms

Management Accounting for Non-specialists is suitable for all undergraduate and postgraduate students from any discipline taking an introductory course or module in management accounting. The 'open-learning' approach also makes it suitable for those studying independently or on distance-learning courses.

Introduction
Objectives
What is accounting?
Who are the users?
Not-for-profit organisations
How useful is accounting information?
Accounting as a service function
Costs and benefits of accounting information
Accounting as an information system
Management and financial accounting
Management accounting information and management decisions
Management accounting and human behaviour
The changing nature of management accounting
Management accounting and information technoogy
The changing role of the management accountant
Business objectives
Summary
Key terms
Further reading
Review questions

Relevant costs

Introduction
Objectives
What is meant by 'cost'?

A definition of cost

Relevant costs: opportunity and outlay costs
Sunk costs and committed costs
Qualitative factors of decisions
Self-assessment question 2.1
Summary
Key terms
Further reading
Review questions
Exercises

Cost-volume-profit analysis

Introduction
Objectives
The behaviour of osts

Fixed costs
Variable costs
Semi-fixed (semi-variable) costs

Break-even analysis
Contribution
Margin of safety and operating gearing
Profit-volume charts
The economist's view of the break-even chart
Weaknesses of break-even analysis
Marginal analysis

Accepting/rejecting special contracts
The most efficient use of scarce resources
Make-or-buy decisions
Closing or continuation decisions

Self-assessment question 3.1
Summary
Key terms
Further reading
Review questions
Exercises

Full costing

Introduction
Objectives
The nature of full costing
Uses of full cost information
Criticisms of full costing
Full costs in single-product operations
Full costs in multi-product operations

Direct and indirect costs
Job costing
Full costing and the behaviour of costs
The problem of indirect costs
Job costing: a worked example

Selecting the basis for charging overheads

Segmenting the overheads
Dealing with overheads on a departmental basis
Batch costing
Full cost as the break-even price
The forward-looking nature of full costing
Full costing in service industries

Self-assessment question 4.1
Summary
Key terms
Further reading
References
Review questions
Exercises

Managing in a competitive environment

Introduction
Objectives
Costing and the changed business environment
Activity-based costing

Cost drivers
Cost pools
ABC and service industries
Criticism of ABC

Self-assessment question 5.1
Pricing

Economic theory
Some practical considerations
Full cost (cost-plus) pricing
Relevant/marginal cost pricing
Pricing strategies

Recent developments in pricing and cost management

Total life-cycle costing
Target costing
Kaizen costing
Benchmarking

Summary
Key terms
Further reading
References
Review questions
Exercises

Budgeting

Introduction
Objectives
Budgets, long-term plans and corporate objectives

Step 1: Setting the aims and objectives of the business
Step 2: Identifying the options available
Step 3: Evaluating the options and making a selection
Step 4: Setting detailed short-term plans or budgets
Step 5: Collecting information on performance and exercising control

Time horizon of plans and budgets
Budgets and forecasts
Periodic and continual budgets
The interrelationship of various budgets
The uses of budgets
The budget-setting process

Step 1: Establish who will take responsibility
Step 2: Communicate budget guidelines to relevant managers
Step 3: Identify the key, or limiting, factor
Step 4: Prepare the budget for the area of the limiting factor
Step 5: Prepare draft budgets for all other areas
Step 6: Review and coordinate budgets
Step 7: Prepare the master budgets
Step 8: Communicate the budgets to all interesting parties
Step 9: Monitor performance relative to the budget

Incremental and zero-base budgeting
An example of a budget: the cash budget
Preparing other budgets
Activity-based budgeting
Non-financial measures in budgeting
Self-assessment question 6.1
Who needs budgets?
Summary
Key terms
Further reading
References
Review questions
Exercises

Accounting for control

Introduction
Objectives
Using budgets for control – flexible budgets

Feedback and feedforward controls

Comparison of actual performance with the budget

Flexing the budget
Sales volume variance
Sales price variance
Materials variances
Labour variances
Fixed overhead variance

Standard quantities and costs

Labour cost standards and the learning-curve effect

Reasons for adverse variances
Non-operating profit variances
Investigating variances
Compensating variances
Necessary conditions for effective budgetary control
Limitations of the traditional approach to control through variances and standards
Behavioural aspects of budgetary control
Self-assessment question 7.1
Summary
Key terms
Further reading
References
Review questions
Exercises

Making capital investment decisions

Introduction
Objectives
The nature of investment decisions
Methods of investment appraisal
Accounting rate of return (ARR)
Payback period (PP)
Net present value (NPV)

Interest lost
Risk
Inflation
Actions of a logical investor
Why NPV is superior to ARR and PP

Internal rate of return (IRR)
Some practical points
Investment decision making in practice
Self-assessment question 8.1
Dealing with risk in investment appraisal

Assessing the level of risk
Reacting to the level of risk

Management of the investment project

Stage 1: Determine investment funds available
Stage 2: Identify profitable project opportunities
Stage 3: Evaluate the proposed project
Stage 4: Approve the project
Stage 5: Monitor and control the project

Summary
Key terms
Further reading
References
Review questions
Exercises
Appendix: Preset value table

Managing working captal

Introduction
Objectives
The nature and purpose of working capital
The scale of working capital
Management of stocks

Budgets of future demand
Financial ratios
Recording and reordering systems
Levels of control
Stock-management models
Materials requirement planning (MRP) system
Just-in-time (JIT) stock management

Management of debtors

Which customers should receive credit?
Length of credit period
Cash discounts
Self-assessment question 9.1
Collection policies
Credit management and the small business

Management of cash

Why hold cash?
How much cash should be held?
Controlling the cash balance
Cash budgets and the management of cash
Operating cash cycle
Cash transmission

Management of trade creditors

Controlling trade creditors

Management of bank overdrafts
Summary
Key terms
Further reading
Review questions
Exercises

Measuring and controlling divisional performance

Introduction
Objectives
Why do businesses divisionalise?
Divisional performance measurement

Return on investment
Residual income
Divisional performance measures and long-ter, performance
Further measurement issues

Self-assessment question 10.1
Transfer pricing

Transfer pricing olicies
Market prices
Variable cost of goods or services
Full cost of goods or services
Negotiated prices

Summary
Key terms
Further reading
References
Review questions
Exercises

Strategic management accounting

Introduction
Objectives
What is strategic management?
What is strategic management accounting?
Assessing a strategic change
Competitor probability analysis
Customer probability analysis
The quest for shareholder value

Creating shareholder value
The need for new forms of measurement
Net present value (NPV) analysis
Extending NPV analysis: shareholder value analysis
Measuring free cash flows
Managing the business with SVA
The implications of SVA
Economic value added (EVA®)
EVA® and SVA
EVA® or SVA?

Non-financial measures of performance
The balanced scorecard
Self-assessment question 11.1
Summary
Key terms
Further reading
References
Review questions
Exercises

Appendix A: Glossary of key terms
Appendix B: Solutions to self-assessment questions
Appendix C: Solutions to selected exercises

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