Management Accounting

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Accounting

Course Text

Professional, Practical, Proven

www.AccountingTechniciansIreland.ie

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FOREWORD ...v SYLLABUS: MANAGEMENT ACCOUNTING ...vii PART 1 – INTRODUCTION

Chapter 1: Introduction to Management Accounting ...3

PART 2 – COST CLASSIFICATION

Chapter 2: Classifying Costs...19 Chapter 3: Analysing and Predicting Mixed Costs ...31

PART 3 – LABOUR COSTS

Chapter 4: Labour Costs ...43

PART 4 – MATERIALS COSTS

Chapter 5: Materials-Related Administration...53 Chapter 6: Managing Inventory Levels...59 Chapter 7: Valuing Inventory ...67

PART 5 – OvERhEAD COSTS

Chapter 8: The Traditional Approach to Overheads...85 Chapter 9: The Activity-Based Approach to Overheads...107 Chapter 10: Comparing the Two Different Approaches... 117

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PART 6 – COST MEASUREMENT SYSTEMS

Chapter 11: Overview of Cost Measurement Systems ...129

Chapter 12: Job Costing Calculations...133

Chapter 13: Recording Job Costs in the Accounting Records ...143

Chapter 14: Batch Costing ...149

Chapter 15: Process Costing ...157

PART 7 – BUDGETING AND STANDARD COSTING Chapter 16: Introduction to Budgeting...165

Chapter 17: Introduction to Standard Costing...173

Chapter 18: Operational Budgets...181

Chapter 19: Budgeted Financial Statements...191

Chapter 20: Cash Budgets...201

Chapter 21: Flexible Budgeting & Limitations of Budgeting ... 211

PART 8 – MARGINAL COSTING FOR DECISION-MAkING Chapter 22: Marginal Costing and Contribution ...221

Chapter 23: Single-Product Cost-Volume-Profit Analysis...243

Chapter 24: Multi-Product Cost-Volume-Profit Analysis...255

PART 9 – RELEvANT COSTS FOR DECISION-MAkING Chapter 25: Introduction to Relevant Costs ...265

Chapter 26: Special Pricing Decisions ...271

Chapter 27: Product Continuation / Discontinuation Decisions...277

Chapter 28: Make-or-Buy Decisions ...285

Chapter 29: Limiting Factor Decisions ...289

PART 10 – STANDARD COSTING vARIANCE ANALYSIS Chapter 30: Introduction to Variance Analysis...297

Chapter 31: Cost Variances – Calculations and Causes...305

Chapter 32: Revenue Variances - Calculations and Causes ...323

Chapter 33: Reconciling Budgeted Profit to Actual Profit...331

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T

his text has been developed by Accounting Technicians Ireland for use by students participating in our programme of study and preparing for our examinations. While every effort is made to ensure that the information outlined in this text is accurate, Accounting Technicians Ireland and the Author cannot accept the responsibility for lack of, or perceived lack of, information contained herein. The text is intended to be a sufficiently detailed synopsis of the current syllabus material (and knowledge level required thereof) in relation to this module.

Students should take particular note of the weighting attaching to this module, as clearly outlined in the syllabus. It is on the basis of this weighting that students should prepare their own timetable for study. On the completion of each chapter, students should refer to the relevant questions dealing with that chapter. Ideally, students should not continue with subsequent chapters until they have completed the questions attaching to the chapter currently under review.

The solutions to the questions are provided under separate cover and although they are the suggested solutions, tutors and students should recognise and appreciate that there might very well be different approaches which would, under examination conditions, be perfectly acceptable.

We recommend that, in order to get the full benefit of the question and answer concept, students should not refer to the solution until they have made a full and genuine attempt at each question.

We also recommend that when students have attained an understanding of each chapter studied, in addition to the questions provided, they should access the Accounting Technicians Ireland website (www.accountingtechniciansireland.ie) for past papers and “sit them under exam conditions”. This will allow students to improve their time management skills and their approach to each type of question.

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Referencing

For the purposes of consistency, all references to “he” or “she” will be referred to as “he” in this publication. No other implication whatsoever is implied from this policy.

For the purposes of presentation, all references to “euro” or “sterling” will be referred to as “euro” is this publication. No other implication whatsoever is implied from this policy.

Acknowledgement

The 2013-2014 edition was prepared by Mr. Tommy Robinson.

Tommy is an experienced accounting lecturer and business management software consultant. He currently works with the business solutions company Simply Dynamics and lectures accounting at the Institute of Technology Blanchardstown (ITB).

Tommy can be contacted at [email protected]

without prior permission in writing from Accounting Technicians Ireland. This publication, or any part thereof, may not be made available in any library, and it may not be reproduced, in whole or in part, stored in a retrieval system or transmitted in any form or by any means – photocopying, electronic, electrostatic, magnetic, pdf, mechanical, recording or otherwise, without prior permission in writing from Accounting Technicians Ireland, 47-49 Pearse Street, Dublin 2.

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SyllabuS

Management accounting

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Management accounting

Subject Status Mandatory Terminal Exam 100% Module Pass Mark 50%

learning Modes Direct Lectures, Workshops, Tutorials, Self Directed Learning Pre-requisite: Financial Accounting, Taxation and either Law & Ethics or Business

Management

Key Learning Outcome

The key learning outcome of this module is to provide learners with knowledge and technical competency in the area of management accounting to support business functions, activities and decision-making.

Key Syllabus Elements and Weightings

1. Nature and Purpose of Management Accounting...10%

2. Management Accounting Systems ...30%

3. Standard Costing, Budgetary Planning & Control ...30%

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learning Outcomes linked to Syllabus Elements

Nature and Purpose of Management Accounting

On completion of this aspect of the module, learners will have acquired the following knowledge, competencies and knowhow:

-(a) A knowledge of the role of management accounting in a business organization (b) An appreciation of business and stakeholder objectives and goals

(c) An ability to contribute to business planning and control exercises through the use of management accounting

(d) An understanding of principles and techniques used in management accounting

Management Accounting Systems

On completion of this aspect of the courses, participants will have acquired the following knowledge, competencies and

know-how:-(a) The ability to utilise a variety of costing techniques in a range of practical business situations; (b) An understanding of costing system terminology and the ability to calculate and discuss various

elements of a costing system;

(c) The ability to generate appropriate product and service costs using traditional and modern approaches, notably activity based and absorption costing;

(d) To be able to calculate appropriate costs for an integrated cost accounting system, including materials, labour and particularly overheads (utilising overhead apportionment and adsorption techniques).

Standard Costing, Budgetary Planning & Control

On completion of this aspect of the module, learners will have acquired the following knowledge, competencies and

know-how:-(a) An understanding of the standard setting process and the ability to calculate, interpret and analyse appropriate variances.

(b) An understanding of and an ability to critically analyse on budget administration procedures and the behavioural aspects of the budgetary process.

(c) The ability to demonstrate an understanding of the processes and principles of budgetary planning and control and to be able to prepare budgets.

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Marginal Costing & Decision Making

On completion of this aspect of the module, learners will have acquired the following knowledge, competencies and

know-how:-(a) The ability to recognise, understand, explain and use marginal and relevant costing techniques in decision making and performance evaluation

(b) Utilisation of diagnostic and creative skills to support decision making in practical integrated business situations, including the use of contribution and breakeven analysis

(c) An ability to communicate effectively through the preparation of relevant management accounting statements using relevant media

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Management accounting

Specific Functional Knowledge and

Competencies understanding application analysis

NaTurE aNd PurPOSE OF MaNagEMENT aCCOuNTiNg (10%)

role of Management accounting

The role of management accounting in

support of business decision making l Comparison and inter-relationship with

financial accounting l l

business and stakeholder objectives and goals

Definition of terms – including planning,

objectives, strategy, control l

Describe different objectives for different

organisations l

business Planning and Control

The process and role of planning l l

Levels at which planning occurs l l

Management by objectives l l

Group and individual decision making

processes. l l

Organisational control and performance

measurement l

MaNagEMENT aCCOuNTiNg SySTEMS (30%)

Costing Systems Terminology

Concepts of cost accumulation l l l

Cost centres and drivers l l l

Cost classification and coding systems l l l

Benefits and problems of traditional and

modern costing systems l l

Types of costing systems l l

Theory of process costing including

equivalent units, normal and abnormal gains and losses, by products and joint products

l l

Costing of materials

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Materials handling l l

Pricing of store issues l l

Purchasing procedures l l

Inventory control ratios l l

Stockholding calculations l l

labour costing

Understanding and calculation of labour

remuneration systems l l

Remuneration and incentive schemes l l

Overhead Costing

Cost centre and cost units l l l

Overhead apportionment and absorption

calculations l l l

Service Department Costing l l l

Under and Over absorption of overheads l l

Administrative, selling and distribution

overheads l l

activity based Costing

Key principles and terminology of Activity

Based Costing (ABC) l l

Classification of costs using ABC l l l

Transaction based cost drivers l l

Overhead absorption calculations using ABC l l

Advantages and disadvantages of ABC l l

Job, Batch and Service costing calculations l l l

Application of equivalent units concept l l

STaNdard COSTiNg, budgETary PlaNNiNg aNd CONTrOl (30%)

Standard Costing - Theoretical aspects

Concept of Standard Costing - including

definition, types of standards, standard setting, relationship with budgets

l l

Advantages and disadvantages of standard

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Standard Costing – Practical application

Standard cost per unit calculations using

absorption and marginal costing l l l

Calculation of variances, including

– Materials price and usage l l l

– Labour rate and efficiency l l l

– Variable overhead expenditure and

efficiency l l l

– Fixed overhead expenditure and volume l l

– Sales volume and price l l

Preparation and explanation of variance

analysis reports l l l

budgetary Planning & Control Processes – Theoretical aspects

Theory of budgetary planning and control l l

Budgetary factors l l

Budgetary processes l

Budgetary techniques, benefits and

problems l l

Behavioural and motivational aspects of

budgeting l l

budgetary Planning & Control –Practical application

Preparation of operational budgets,

including l l l – sales l l l – production l l l – materials l l l – labour l l l – overhead l l l

Preparation of projected Income Statements and Statements of Financial Position

Detailed

l l

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MargiNal COSTiNg & dECiSiON MaKiNg (30%)

Marginal Costing Techniques

Cost behaviour - including fixed, variable,

semi-variable, stepped costs and inflation. l l l

Comparison of marginal and absorption

costing l l l

Contribution and marginal costing

calculations and costing statements. l l l

Marginal costing in management decision

making l l l

Management accounting for decision Making

Cost-Volume Profit and Breakeven Analysis,

including l l

– margin of safety l l

– target profit l l

– contribution/sales ratio l l

Breakeven charts and formulae l l

Application of cost-volume-profit analysis to

multi-product scenarios l l

relevant Costing in decision making

Preparation of cost estimates for decision making including relevant, opportunity and

sunk costs l l

Short term decision making calculations, including

– product elimination l l

– consideration of limiting factors l l

– make or buy l l

Pricing decisions, including

– mark-up l l

– margin l l

– full price l l

Preparation of management accounting statements appropriate to typical decision

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assessment Criteria

assessment Techniques 100% Assessment based on the final exam.

Format of Examination Paper The Paper Consists of SIX Questions which will examine all key syllabus elements to ensure that learning outcomes are achieved

SECTiON a

THREE Compulsory Questions SECTiON b

THREE Questions - Answer TWO

All Questions carry equal marks

Sample Paper Each of the 3 sample papers will examine appropriate parts of this syllabus.

Essential reading Management Accounting (Second Year) author:Accounting Technicians Ireland Web resources www.accountancymag.co.uk

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In first year, you studied financial accounting – which is largely concerned with recording transactions that have happened in the past and presenting a summary of those transactions in the form of financial statements.

However, as running a business requires managers to continually make decisions that will improve the future of their businesses, a different kind of information – management accounting information - is required.

This part of the course will focus mainly on what kinds of information managers require, how management accounting differs from financial accounting and the job of management accountants / financial managers.

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ChaPter 1 Introduction to Management

accounting

ChaPter OvervIew

A

ccounting is the ‘language’ used by businesses to communicate both financial information and non-financial information to individuals and groups who have an interest in how the business is performing.

This chapter considers how management accounting information is communicated and why managers need this information.

LEARNING OUTCOMES FOR THIS CHAPTER

After studying this chapter, you should be able to:

1. Identify users of accounting information and their information needs

2. Understand the difference between management accounting and financial accounting 3. Appreciate the nature, purpose and uses of management accounting

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USerS OF aCCOUNtING INFOrMatION aND theIr INFOrMatION NeeDS

Users Of accounting Information

Users of accounting information can be broadly classified into two categories: • Users who are external to the organisation (dark-shaded circles below). • Users who are internal to the organisation (light-shaded circles below).

Each user / user group has its own information requirements. Access to accounting information differs according to the relationship between the business and the user / user group.

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USerS’ INFOrMatION reqUIreMeNtS

An organisation’s stakeholders, and their respective information requirements, include the following:

Stakeholder Information required

Equity Investors Information on investment values and the potential return to be earned from their investments

Managers Information for decision-making, planning and control purposes Employees Information about the organisation’s ability to provide secure

employment and pay market-rate wages / salaries

Suppliers & Lenders Information about the organisation’s ability to meet current and_{future financial obligations}

Governments & Regulators Information to assess tax liabilities, for economic projections, and for enforcement of legislation

Special-interest groups (such as environmental groups, community groups and lobby groups)

Information related to their specific interests

MaNaGeMeNt aCCOUNtING verSUS FINaNCIaL aCCOUNtING

Two branches of accounting have evolved to deal with the information needs of user groups - both internal and external:

1. Financial accounting is primarily concerned with providing information to external users.

2. Management accounting is concerned with providing information to users within the organisation to assist with effective and efficient management of the business.

Although there are many differences between management accounting and financial accounting, the primary information used for the preparation of both management accounting reports and financial accounting reports stems from the same source – costs incurred by the organisation and revenues earned by the organisation.

The major differences between management accounting and financial accounting can be summarised as follows:

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Management accounting Financial accounting Legal Requirements No legal requirements.

No audit requirement.

Legal and accounting regulations requirements.

Statutory audit requirement (for certain types and sizes of businesses).

Frequency Of Reports As required (normally monthly). Annually, semi-annually, Quarterly. Primary Users Internal management. External users.

Time Focus Present and future. Historic.

Format & Content Of Reports

Detailed information in a format to suit management requirements.

Summary information in a format prescribed by accounting regulations and law.

The above differences are discussed in more detail below: Legal requirements

Businesses have a legal obligation to produce financial statements every year. These financial statements must be prepared in accordance with published accounting principles and, depending on certain criteria, are subject to statutory audit. Although there is no legal requirement or obligation to prepare management accounts, it is good business practice to regularly produce accounting information as a useful tool to assist management in carrying out their duties in a proper manner. There is no requirement to audit management accounts.

Frequency of reporting

Financial statements must be prepared annually. There are sometimes regulatory requirements to present less-detailed accounting reports on a semi-annual or Quarterly basis. Where there is benefit to be gained from producing management accounts, the frequency of production is at management’s discretion, typically ranging from daily, to weekly, to monthly, or ad-hoc, to suit management needs. Primary Users

Financial accounting presents accounting information for use by a wide variety of external users, as well as internal managers. Management accounts are solely for the use of the internal management of the organisation.

time Focus

Financial accounting reports focus on what has happened in the past. Management accounting uses accounting information to project future trends and control, or attempt to control, current and future business performance.

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Format & Content of reports

Both the law and accounting regulations provide templates for the presentation of financial statements and instruction on minimum information disclosure. As financial accounting information is in the public arena, there is an inherent acknowledgment by regulators of the sensitivity surrounding the disclosure of certain information and the main focus of these disclosure requirements is on summarised financial data. Financial statements focus on the business in its entirety. Management accounting operates on the basis of meeting the needs of internal management. The format and content of management accounts depend upon the specific requirements of management. Different businesses will have different information requirements and their individual management accounts will reflect this. As internal reports, management accounts will often contain business-sensitive information for a restricted audience and can focus on both financial information and non-financial information, such as critical success factors (measures of factors or aspects of an organisation’s performance deemed to be critical, or essential, to its competitive advantage and thereby its success). In addition, management accounts will often present very detailed information at a department level or product-line level.

the NatUre, PUrPOSe aND USeS OF MaNaGeMeNt aCCOUNtING

Management accounting involves applying accounting and financial management principles to the provision of information to managers within an organisation to help them plan and control the organisation’s activities and to make business decisions.

Management accounting information for managers

• When you select an item to buy, you will have to pay the selling price of the product. How has this price been arrived at ?

• When you decide to renovate your house, you will compare quotes from different builders. How have the quotes been calculated ? Why are they different ?

• When you undertake a college course, you have to pay fees. What basis has been used to set these fees ?

• When you buy supermarket ‘own brand’ products, do you wonder who produces them and why the manufacturer has chosen not to market them under their own brand ?

As a consumer, you may not pay much attention to these questions, but as a manager of a business, you must pay attention to the factors, both financial and non-financial, that underpin these decisions. Failure to do so may result in the failure of the business.

Business Management Systems

Some of you may be familiar with basic accounting software – which generates invoices, records transactions in the General Ledger, produces a Trial Balance and financial statements. However, business management software goes way beyond that. Comprehensive business management software - often known as ERP (Enterprise Resource Planning) software helps to manage inventory, marketing campaigns, HR functions, manufacturing operations, non-current assets, cash flow management and much, much more. A menu from one such system (Microsoft Dynamics NAV 2013) is shown below to illustrate this.

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Business Intelligence Software

Business Intelligence (BI) software goes even further than ERP software in terms of providing information to help managers run their businesses. While ERP systems automate the processing of data and streamline business functions, business intelligence software delivers the information processed by the ERP system in a form that is very useful to management. A screenshot from one such business intelligence software product (BI4Dynamics – which is designed to work with the Microsoft Dynamics ERP system) is shown below to illustrate this.

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PLaNNING, CONtrOL aND DeCISION-MaKING

Every organisation has managers. These managers have a responsibility to the organisation’s stakeholders to manage the organisation in the most-effective and most-efficient way, to maximise the organisation’s potential. This involves the managers undertaking adequateplanningfor the short-term and long-term future of the business, ensuring that the business is being properlycontrolledto ensure plans succeed, and makingdecisionsthat will enable the business to survive and grow in the future. Management accounting equips managers with information required to carry out these tasks.

PLaNNING

The fundamental objective of planning is to assist management in deciding how to allocate an organisation’s resources.

There are 4 main types of planning: 1 - Strategic Planning

This establishes, for management, the shape and direction to be taken by the organisation. This type of planning is normally ad-hoc and is driven by the recognition of a need for the revision / change of priorities. This normally results from seeing actual results achieved and / or projected outcomes under a variety of proposed strategies.

2 - Long-range Planning

This covers periods of anything from 2-10 years which plans for the proper gearing of the organisation to achieve its goals / objectives.

3 - Project and Situation Planning

This is normally to do with planning the short-term use of a segment of the organisation’s resources, such as the investment of surplus cash or, if spare capacity was identified, how best to use it (say for a once-off order).

4 - Short-range Periodic Planning

This type of planning is concerned with deciding how resources will be used in the short-term and predicting the financial outcome of these decisions (i.e. budgeting). Budgeting is a quantitative expression of a plan. It shows the expected financial implications of decisions taken and proposed decisions and helps identify the resources required to achieve goals set.

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CONtrOL

Control is a key feature of management accounting and follows on from planning. Control can be exercised at a strategic and / or an operational level.

• Strategically, the business plan of an organisation will be reviewed in light of developments to assess if the objectives of the plan can be achieved.

• Operationally, the performance of the organisation is reviewed in the context of detailed plans (including budgets) so that corrective action can be taken, if necessary.

Control is not practical without initial planning and planning, without control, is somewhat pointless. types Of Controls

There are 3 main types of controls

1 - action Controls / Behavioural Controls

These involve observing the actions of individuals as they go about their daily work (eg: work studies: quality and quantity controls) to assess whether both quantity targets and quality targets are being met, and, if not, to inform corrective action.

EXAMPLE

If a supervisor observes the workers on an assembly line and ensures that the work is done exactly as prescribed, then the expected quality and quantity of the work should ensue.

2 - Personnel and Cultural Controls

Personnel and cultural controls involve establishing expected values, behaviours and norms which are used to support the achievement of targets. These are controls which help employees do a good job, by building on their natural tendencies. Cultural controls represent a set of values, social norms and beliefs that are shared by members of the organisation and that influence their performance.

3 - results / Output Controls

These involve collecting, analysing and reporting information about the outcomes of work effort. This type of control is focused on quantitative information and can be most-closely related to management accounting information produced. Such information may include variance analysis and other key target statistics. Results controls require performance targets to be set, establishment of actual results, measurement of performance and taking action accordingly. Management accounting controls are mostly defined in mandatory terms such as revenues, costs, profits, or ratios. Organisations should have a system of management reporting that produces control information in a specified format at regular intervals.

harmful Side-effects Of Control

When controls motivate behaviour that is organisationally desirable, they are described as encouraging “goal congruence”. However, when controls motivate employees to engage in behaviour that’s not organisationally desirable, they can lead to a lack of “goal congruence”.

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DeCISION-MaKING

The first stage in the decision-making process should be to specify the goals or objectives of the organisation. These goals / objectives will vary depending on the type of organisation.

It is simplistic to say that the only objective of a business is to earn profit - and clearly this would not be the case in a not-for-profit, or charitable, organisation.

In private-sector businesses, some managers might seek to establish a power base, build an empire, or ensure security. However, a commonly-held view, supporting the profit objective is that profit maximisation leads to the maximisation of overall economic welfare.

In a not-for-profit, or charitable, organisation, the driver is social / welfare principles, not profit. In the public-sector, the primary goal / objective might be to provide a quality service to the public. Although the driver in these organisations is not profit, it would be desirable that they would at least be self-financing and not require government subvention.

Management-by-Objectives

Management-by-Objectives (MBO) is a management technique designed to help achieve goals / objectives. The principle behind MBO is to create empowered employees who are clear about the roles and responsibilities expected from them, understand the objectives to be achieved and thus help in the achievement of organisational, as well as personal, goals.

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PerFOrMaNCe MaNaGeMeNt

Performance management is a term used to describe the various activities carried out to ensure that an organisation’s goals and objectives are being met in an effective and efficient manner.

Performance management normally operates at 3 levels: 1. for the organisation as a whole

2. within departments or sections 3. in teams or for individuals.

Performance management is used both in businesses and, increasingly, in not-for-profit organisations (eg: public service departments).

Performance management can involve a range of qualitative and quantitative activities, but a main aim is to create ‘goal congruence’ within an organisation. Goal congruence entails everyone acting in the common interest of achieving the most important objectives of the organisation – which can be expressed as ‘Key Performance Indicators’ (KPI’s).

Performance management targets are likely to include: Financial Targets

• market share

• manufacturing efficiencies • gross profit / net profit Service Targets

• customer satisfaction measures • service output measures • repeat business

• innovative developments or improvements

The benefits of good control and performance management can include: • direct financial gains

• improved motivation and employee satisfaction and • improved efficiency in systems and processes

Performance Management (PM) includes activities to ensure that goals are consistently being met in an effective and efficient manner. It can focus on performance of the organisation, performance of a department, performance of employees, etc. The PM approach is most-often used in the workplace, but also applies wherever people interact – schools, community meetings, health organisations and government agencies, etc.

Armstrong & Baron defined PM as “A strategic and integrated approach to increasing the effectiveness of organisations, by improving the performance of the people who work in them and by developing the capabilities of teams and individual contributors.”

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Benefits of PM may include:

1. Direct financial gains, e.g. increase sales, reduce costs

2. Create transparency in cultivating goals, thus creating confidence in the process for determining bonus payments.

3. Improved management controls Performance appraisal

This applies where individual performance is formally monitored and feedback is delivered. This is done by establishing Key Performance Indicators (KPIs) for individuals, against which performance is rated or measured and the ratings summarised. Top performance is normally rewarded. The performance appraisal process should be seen as part of guiding and managing career development. It is also a method of measuring an employee’s worth to the organisation.

COSt aCCOUNtING

Management Accounting is concerned with both costs and revenues. The part of management accounting that is concerned with costs is often known as Cost Accounting. A Cost Accounting system is generally made up of the following five parts:

1. an input measurement basis 2. an inventory valuation method 3. a cost accumulation method 4. a cost flow assumption

5. a capability of recording inventory cost flows at certain intervals These five parts, and the alternatives under each part, are presented below.

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Many possible cost accounting systems can be designed from the various combinations of the available alternatives, although not all of the alternatives are compatible. Selecting one part from each category provides a basis for developing an operational definition of a specific cost accounting system.

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PraCtICe qUeStIONS

question 1.1

Outline the main users of accounting information and the information requirements of each user / user group.

question 1.2

Outline the key differences between management accounting and financial accounting.

question 1.3

Why do managers need management accounting information ?

question 1.4

What types of financial information and non-financial information would the following people require: 1. A buyer in a retail clothing business

2. A production manager in a toy factory 3. The managing director of a private hospital

4. Project managers in an overseas charity aid organisation

question 1.5

Discuss, giving practical examples where relevant, how management accounting can contribute to the effectiveness of an organisation.

question 1.6

Describe a typical planning and control cycle.

Why is it important for businesses to implement this cycle ?

question 1.7

Describe different types of control.

question 1.8

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question 1.9

Give three examples of ways in which a cost accounting system could aid cost control in a haulage business.