Objectives :
On completion of this subject students should have developed skills of analysis, evaluation and synthesis in cost and management accounting and, in the process, created an awareness of current developments and issue in the area. The subject covers the complex modern industrial organisations within which the various facets of decision-making and controlling operations take place; the subject includes discussion of costing systems and activity based costing, activity management, and implementation issues in modern costing systems.

Synopsis :

• identify the basic conventions and doctrines of managerial and cost accounting and other generally accepted principles which may be applied in the contemporary cost management models.
• identify major contemporary issues that have emerged in managerial accounting.
• discuss a number of issues relating to the design and implementation of cost management models in modern firms.

Topics Covered :

Topic 1 : Management Control Systems

The role of accounting is often stated to be providing information for decisions. Management accounting, however, fulfils a much broader role in organisations. As well as providing a framework for planning, management accounting has an important role in management control. This topic introduces the concept of management control and considers the role of management accounting within such a control framework. The design of management accounting systems are also considered.

Topic 2 : Lean Manufacturing and Quality Control

This topic introduces the traditional production management techniques and strategies. The 5-P’s of production are specifically considered; i.e. the product, plant, process, program, and people. The three traditional types of production; i.e. Job; Batch; and Flow production are also studied, and concepts such as quality and reliability are also introduced. Modern production management techniques originating from Japan, such as Flexible Manufacturing Systems (FMS); and Total Quality Management (TQM) are also considered.

Topic 3 : Cost Accounting and Cost Management in a Lean Environment 

This topic continues to look at production management techniques and strategies, especially the more modern production philosophies originating from Japan, such as Just-In-Time production (JIT). The strategic management accounting issues raised by such philosophies and techniques and aspects of the influence of the philosophy on production and purchasing are also covered.

Topic 4 : Lifecycle Costing System 

This topic overviews the complexity that exists in modern industrial settings, and why the conventional management accounting techniques may provide misleading information in such environments. It is shown that indirect costs make up the largest percentage of total costs in such complex firms, and that there are many challenges in allocating such indirect costs. Methods of identifying ‘obsolete’ cost systems and of improving cost control are also discussed. Whole of Life Costing, i.e. costing before, during and after manufacturing is considered within a complex and competitive industrial setting.

Topic 5 : Benchmarking

This topic discusses in depth “benchmarking”; which is the formal process of measuring and comparing a company’s operations, products, and services against those of top performers, both within and outside that company’s primary industry.

Topic 6 : Activity Based Cost Allocation Systems

This topic focuses on the principles of Activity Based Costing (ABC), which is shown as the response to the challenge of complexity. Aspects such as “volume”, “structural” and “introductory” costs are specifically considered.

Topic 7 : Customer Profitability Analysis

This topic moves the focus from analysis to action. Methods of finding profitable customers and products are considered, as is the area of account management.

Topic 8 : Process Control and Activity Based Management

Here the areas of process control and activity based management are discussed. Monitoring systems, and the concepts of frequency, timeliness and accuracy are considered, especially in relation to white-collar departments.

Topic 9 : Implementing Cost Analysis and Control Systems

This outlines the implementation process of activity based costing. Behavioural aspects, especially in creating motivation are discussed. Long-term cost management models are also considered.

Topic 10 : Strategic Performance Management Systems

This topic looks at Strategic Performance Measurement Systems, especially the linking of financial control systems with process based control systems.  Some Key Questions to ask in the strategic refocusing of Performance Measurement Systems are discussed, and the recognition of how tangible and intangible assets combine in the implementation of organisational strategies that ultimately enhances organisational value is specifically considered.

Topic 11 : Emerging Issues I: Triple Bottom Line Accounting and Carbonomics 

Topic 12 : Emerging Issues II: Governance, Empowerment and the Strategic Audit 

This topic first overviews the corporate governance structure which specifies the distribution of rights and responsibilities among different participants in the corporation, such as, the board, managers, shareholders and other stakeholders, and spells out the rules and procedures for making decisions on corporate affairs. Next, it considers the issue of an Empowered workforce, and how this can contribute to enhanced shareholder value. Finally, it considers assurance issues using ‘leading’ rather than ‘lagging’ indicators, via the Strategic Audit.