Aims

The aim of this module is to explain to students the ways according to which management accounting serves organisations through improved decision making and through the control of the members of the organisation. The focus will be on both planning and decision making as well as on performance evaluation and control. The decision-making part is related to the technical procedures which facilitate organizations to deal with management accounting problems while the control dimension contributes with insights and techniques which lead to the realization of the above solutions. The module will address techniques that focus on both decision-making and planning, like absorption cost allocation and Activity Based Costing. However, it will also explore the effects of the above techniques on the behaviour of managers and how to control for these effects. 

Learning Outcomes

Students will be able to:

• Understand and appreciate the strengths and limitations of an organization's accounting system 
• Become more sophisticated users of accounting systems
• Think about accounting systems and be able to proposes changes to these
• To understand that managerial accounting is a vital part of a firm's organizational architecture
• To understand the trade-off between an accounting system's decision-making ability and its effectiveness as a control mechanism
• To appreciate the importance of opportunity costs in decision making
• Allocate costs using different methodologies
• Design a budget

• The nature of costs
• Opportunity cost of capital and capital budgeting
• Organizational architecture
• Responsibility accounting & transfer Pricing
• Budgeting
• Cost allocation: theory and practices
• Absorption cost system
• Criticisms of absorption cost systems: Incentives to overproduce
• Criticisms of absorption cost systems: Inaccurate product costs
• Standard costs: Direct labour and materials
• Overhead and marketing variances
• Management accounting in a changing environment