Management Accounting
Unit summary
This unit requires the learner to apply management accounting techniques to help managers in the processes of planning, control and performance measurement. In the first learning outcome the learner will develop forecasts of demand, turover, resources required and their associated costs. The forecasts will be used to prepare budgets for income and expenditure. Revisions of the original budgets will be made in light of emerging factors which limit operations within the organisation. The second learning outcome focuses on the identification and analysis of costs. Costs will be analysed and monitored against trends and standards with any variations between actual and standard costs explained. The third learning outcome includes both monitoring performance and recommending alternate courses of action to enhance organisational efficiency and effectiveness. Learners will identify and calculate performance indicators, monitor performance of part of, or the entire organisation and make proposals that will enhance the value of the organisation.
Unit details
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15 Business, Administration and Law
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15.1
Accounting and Finance
Assessment methodology: Independent assessment of at least 3 hours duration is mandatory for this unit, OR, if NVQ, work-based evidence. You must have knowledge and understanding of: The Business Environment: 1. External sources of information on costs, prices, demand and availability of resources; 2. General economic environment. Accounting Techniques: 3. Basic statistical methods: index numbers, sampling techniques, time series analysis (moving averages, linear regression and seasonal trends; 4. Use of relevant computer packages; 5. Development of production, resource and revenue budgets from forecast sales data; 6. The effect of capacity constraints, other production constraints and sales constraints on budgets, limiting (key or budget) factor; 7. Budgets for control; 8. Methods of presenting information that satisfies the needs of differnet users; 9. Standard costing; 10. Performance indicators: efficiency, effectiveness, productivity, balanced scorecard, benchmarking, unit costs, control ratios (efficiency, capacity and activity), scenario planning ('what-if' analysis). Accounting Principles and Theory: 11. Marginal and absorption costing: cost recording, cost reporting and cost behaviour; 12. Cost management: life cycle costing, target costing (including value engineering) activity based costing, principles of Total Quality Management (including the cost of quality); 13. Effect of accounting controls on the behaviour and motivation of managers and other employees; 14. Different types of budgets: budgets for income and expenditure, resource budgets (production, material, labour and other resource budgets), capital budgets. The Organisation: 15. How the accounting system of an organisation are affected by its organisational structure, its administrative systems and procedures and the nature of its business transactions; 16. The organisation's external environment (continued below)
Simple Merge:
NOS: (continued from above)
17. The contribution of functional specialists in an organisation (e.g. marketing, design, engineering, quality control) to cost reduction and value enhancement; 18. The structure of the organisation and its responsibility centres (expense, profit and investment centres)
Based on AOSG Level 4 in Accounting Units 8 and 9
Other: no text found
FSSC have formally supported this qualification (please see letter of support attached in the qualification need / support section).
| Learning Outcome |
Assessment Criteria |
| 1. Prepare forecasts and budgets |
33.1.A Correctly identify relevant accounting information for preparing forecasts and budgets from internal and external sources
33.1.B Correctly identify relevant wage and salaries information for preparing forecasts and budgets from internal and external sources
33.1.C Correctly identify relevant information from internal and external sources about suppliers and availability of inputs for preparing forecasts and budgets from internal and external sources
33.1.D Correctly identify relevant information from internal and external sources about customers and markets for preparing forecasts and budgets from internal and external sources
33.1.E Correctly identify relevant general economic information for preparing forecasts and budgets from internal and external sources
33.1.F Communicate with budget holders and agree draft budgets with them
33.1.G Prepare income forecasts in a clear format with explanations of assumptions and projections in trends and taking account of seasonal variations
33.1.H Prepare expenditure forecasts in a clear format with explanations of assumptions and projections in trends and taking account of seasonal variations
33.1.I Prepare resource budgets (production budget, material budget, labour budget, fixed overhead budget) in a clear format with explanations of assumptions and projections in trends and taking account of seasonal variations
33.1.J Prepare capital budgets in a clear format with explanations of assumptions and projections in trends and taking account of seasonal variations
33.1.K Review and revise the validity of income and expenditure forecasts in the light of any significant anticipated changes
33.1.L Review and revise the validity of resource and capital budgets in the light of any significant anticipated changes |
| 2. Collect, analyse and disseminate information about costs |
33.2.A Identify valid, relevant information from internal and external sources
33.2.B Compare standard costs with actual costs and analyse material price and usage variances
33.2.C Compare standard costs with actual costs and analyse labour rate and efficiency variances
33.2.D Compare standard costs with actual costs and analyse fixed overhead expenditure, volume, capacity and efficiency variances
33.2.E Compare standard costs with actual costs and analyse sales volume and price variances
33.2.F Compare standard costs with actual costs and analyse subdivision of variances
33.2.G Analyse the effect of organisational accounting policies on reported costs where absorption costing has been used
33.2.H Analyse the effect of organisational accounting policies on reported cost where marginal costing has been used
33.2.I Analyse the effect of organisational accounting policies on reported costs where activity based costing has been used
33.2.J Consult with relevant staff in the organisation about the analysis of materials, labour, fixed overheads and sales variances
33.2.K Prepare written analysis and explanation to management in an appropriate format that highlights significant variances
33.2.L Present tabular reports to management in an appropriate format that highlights significant variances |
| 3. Monitor performance and make recommendations to enhance value |
33.3.A Accurately analyse routine cost reports, compare them with other sources of information and identify any implications
33.3.B Accurately analyse income and expenditure budgets, compare them with other sources of information and identify any implications
33.3.C Accurately analyse resource budgets, compare them with other sources of information and identify any implications
33.3.D Accurately analyse fixed and flexible budgets with other sources of information and identify any implications
33.3.E Correctly prepare and monitor performance indicators for financial, customer, internal business, learning and growth perspectives, interpret the results, identify potential improvements and estimate the value of potential improvements
33.3.F Correctly prepare and monitor performance indicators for efficiency, effectiveness and productivity, interpret the results, identify potential improvements and estimate the value of potential improvements
33.3.G Correctly prepare and monitor performance indicators for unit costs and resource utilisation, interpret the results, identify potential improvements and estimate the value of potential improvements
33.3.H Correctly prepare and monitor performance indicators for profitability, interpret the results, identify potential improvements and estimate the value of potential improvements
33.3.I Correctly prepare and monitor performance indicators for quality of service, interpret the results, identify potential improvements and estimate the value of potential improvements
33.3.J Correctly prepare and monitor performance indicators for the cost of quality, interpret the results, identify potential improvements and estimate the value of potential improvements
33.3.K Consult relevant specialists and assist in identifying ways to reduce costs and enhance value
33.3.L Prepare exception reports to identify matters which require further investigation
33.3.M Make specific recommendations for improved efficiency to management in a clear and appropriate form
33.3.N Make specific recommendations for modifications to work processes to management in a clear and appropriate form
33.3.O Make specific recommendations for benchmarking to management in a clear and appropriate form |