Accountants Park
Plot No. 2374/a
Thabo Mbeki Road, Lusaka
(+260) 211 374 551-9

DA9-Management Accounting

No access plans exist.
DA9-Management Accounting

Course Features

Course Details

DA9-Management Accounting

Learning outcomes

On successful completion of D9, students should be able to:
  1. Explain the importance of management accounting for decision making and contrast it with financial accounting
  2. Apply relevant costing principles to different scenarios and explain the use of relevant costing in short-term decision making
  3. Apply the cost volume profit model and critically evaluate its value in decision making
  4. Describe and evaluate different pricing strategies
  5. Analyse cost and revenue variances and recommend appropriate responses to identified variances
  6. Prepare those budgets commonly used in practice and explain the behavioural implications of using budget variances for performance evaluation
  7. Apply alternative modern management accounting techniques and explain when each is appropriate
  8. Evaluate an appropriate working capital strategy for a company
Topic Weighting
Introduction to Management Accounting 5%
Short-term decision making 10%
Cost volume profit analysis 10%
Costs and pricing decisions 10%
Standard costing and variance analysis 20%
Budgeting and budgetary control 25%
Modern management accounting techniques 10%
Working Capital Management 10%


  1. Introduction to Management Accounting
    1. Scope of Management Accounting
      • Explain the scope of management accounting
      • Explain the role of a Management accountant
    2. Management Accounting compared to Financial Accounting
      • Compare management accounting with financial accounting
    3. The role of Management Accounting in decision making
      • Explain the importance of management accounting for decision making
  2. Short-term decision making

    1. Decision making process
      • Identify the principles used in short term decision making
      • Explain why cost accounting data may not be suitable for decision making
    2. Relevant costing concept
      • Explain the concept of relevant costing in the context of decision making
      • Calculate relevant costs and revenues
      • Distinguish relevant costs and revenues from irrelevant costs and revenues
      • Describe the assumptions made when applying relevant costing
    3. Short-term decisions
      • Identify what the limiting factor is when there are scarce resources and choose an appropriate techniques
      • Determine the production plan that will maximise contribution when an organisation is restricted by a single limiting factor, including where the organisation faces ‘make or buy’ decisions.
      • Determine whether a product should be further processed or not
      • Apply relevant costing to different business decisions
        • Determine whether an organisation should close down a part of the business, which could be a product line, department or other activity
        • Determine whether a special one off contract should be accepted
        • Determine the minimum price that should be quoted for a particular one-off product or contract.
    4. Considerations for qualitative factors
      • Identify non-quantifiable factors to be taken into account when applying relevant costing during decisions
  3. Cost volume profit analysis

    1. Nature of short term planning decisions
      •  Explain the concept of CVP analysis
    2. Practical applications of the CVP model
      • Calculate the following measures o Breakeven points o Contribution/sales ratio
        • Margin of safety
        • Target profits
      • Interpret the CVP measures
      • Apply CVP to situations involving a single product
      • Explain the principles of multiple product CVP analysis
      • Prepare and interpret breakeven and profit/volume charts
    3. Assumptions underlying the single CVP model
      • Describe the assumptions made when using CVP analysis and explain how these assumptions limit its use of decision making
    4. The accountant’s Cost Volume Profit (CVP) Model and Comparison with the economist’s CVP Model
      • Distinguish accountants and economists view of CVP analysis
    5. Usefulness and limitations of the model
      • Explain the usefulness and limitations of the CVP analysis
  4. Costs and pricing decisions

    1. A Pricing in an organisation
      • Explain factors to consider when pricing
      • Calculate the price using the demand function
    2. Cost plus pricing
      • Explain how demand influence the price of a product
      • Explain how factors other than demand can influence the price of a product
      • Calculate prices using full cost-plus
    3. Marginal cost plus pricing
      • Calculate prices using marginal cost-plus pricing
    4. Other pricing methods
      • Calculate prices using Activity based costing
      • Calculate prices using Standard costing
    5. Pricing strategies
      • Explain suitable pricing methods for specific situations, taking into account the objectives of the organisation
  5.  Standard costing and variance analysis

    1. Variance analysis for costs
      • Calculate the following variances
        • Material total, usage and price
        • Labour total, efficiency and rate
        • Idle time
        • Variable overhead total, efficiency and expenditure o Fixed overhead total, volume (efficiency and capacity) and expenditure
    2. Variance analysis for revenue
      • Calculate the following variances
        • Selling price (or sales price)
        • Sales volume profit
    3. Variances and control
      • Explain the causes of the variances
      • Explain how management use various analysis for control purposes
      • Suggest appropriate responses to identified variances
    4. Operating statements using absorption costing and marginal costing
      • Prepare an operating statement reconciling budgeted profit to actual profit under
        • Standard absorption costing
        • Standard marginal costing
    5. Advanced variances
      • Calculate the following variances
        • Material mix and yield
        • Sales mix and quantity
        • Planning and operational
  6. Budgeting and budgetary control

    1. Introduction to budgeting: meaning and usefulness, benefits and limitations, the budgeting process
      • Explain how organisation use budgets
      • Describe the administration involved when budgeting
      • Describe the budget preparation process
    2. Types of budgets
      • Prepare functional budgets, cash budgets and a master budget
      • Explain the importance of forecasting techniques in the preparation of budgets
      • Explain how a capital expenditure budget is prepared and its importance
      • Explain what a fixed budget is and how it is used by management
      • Describe how rolling budgets are used by management
      • Prepare and interpret flexible budgets are used for control purposes
    3. Behavioural implications of budgeting and budgetary control
      • Explain the behavioural implications of using budgets for control and performance evaluation
      • Explain the use of budgets for motivational purposes
    4. Application of Information technology in budget preparation
      • Describe and evaluate the following budgetary systems:
        • Incremental budgeting
        • Zero based budgeting
        • Programme planning and budgetary systems (PPBS)
        • Recommend which of the above budgetary systems may be appropriate in specific situations
      • Explain why PPSB is suitable for public sector and not for profit organisations and why traditional budgeting techniques are often suitable.
  7. Modern management accounting techniques

    1.  Throughput accounting
      • Compare and contrast the ‘traditional’ and the ‘modern’ manufacturing philosophy
      • Explain the theory of constraints and the concept of throughput accounting
      • Calculate throughput measures and throughput accounting ratios and use them for decision making
    2. Target costing
      • Describe the steps involved in target costing and calculate target costs
    3. Life cycle costing
      • Describe the stages of the product life cycle
      • Explain the concept of life cycle costing and how it can be used to maximise returns
      • Explain the effect of life cycle costs on an organisations marketing strategies
    4. Backflush accounting
      • Describe the backflush method of accounting and explain how it simplifies the accounting process
    5. Kaizen costing
      • Explain the concept of kaizen costing
  8. Working Capital Management

    1. The nature, elements and importance of working capital
      • Describe the nature of working capital and identify its elements
      • Identify the objectives of working capital management in terms of liquidity and profitability
      • Explain the conflict between liquidity and profitability
      • Explain the central role of working capital management in financial management.
    2. Working capital investment
      • Explain the cash operating cycle
      • Explain and apply relevant accounting ratios, including:
        • inventory turnover ratio, average collection period and average payable period o sales revenue/net working capital ratio
        • Calculate the level of working capital investment in current assets and discuss the key factors determining this level, including:
        • the length of the working capital cycle and terms of trade
        • an organisation’s policy on the level of investment in current assets o the industry in which the organisation operates
      • Identify if a company is overtrading
    3. Working capital financing
      • Describe the different working capital financing strategies that an organisation may follow, including:
        • the distinction between permanent and fluctuating current assets
        • the relative cost and risk of short-term and long-term finance
        • the matching principle
        • the relative costs and benefits of aggressive, conservative and matching funding policies
    4. Inventory management
      • Explain the use of relevant techniques in managing inventory, including the Economic Order Quantity model and Just in-Time techniques
      • Calculate the optimum order size using the EOQ model
    5. Receivables management
      • Explain the use of relevant techniques in managing accounts receivable, including (only basic calculations will be tested in this area):
        • assessing creditworthiness
        • managing accounts receivable
        • collecting amounts owing
        • offering early settlement discounts
        • using factoring and invoice discounting
    6. Payables management
      • Explain the use of relevant techniques in managing accounts payable, including:
        • using trade credit effectively
        • evaluating the benefits of discounts for early settlement and bulk purchase
      • Explain factors affecting credit worthiness
    7. Cash management
      • Explain the various reasons for holding cash
      • Explain the cash management models, such as the Baumol model and the MillerOrr model (calculations will not be examined, students are expected to have the basic understanding of these techniques)
      • Explain the use of relevant techniques in managing cash, including:
        • preparing cash flow forecasts to determine future cash flows and cash balances
        • assessing the benefits of centralised treasury management and cash control
        • investing short-term

Format of the exam

Section Marks
Section A: 2 compulsory questions, 25 marks each 50
Section B: Any 2 out of 3 questions, 25 marks each 50
TOTAL  100
Time allowed: 3 hours, plus 15 minutes reading time

Recommended reading

  1. ZiCA D9 Study Manual
  2. Atkinson, A A, Kaplan, R S, Matsumura, M, and Young, S M, Management Accounting: Information for Decision-Making and Strategy Execution, 6th edition, FT Prentice Hall, 2011
  3. Drury, C, Management and Cost Accounting, 7th edition, Cengage Learning EMEA, 2008
This course does not have any sections.

More Courses by this Instructor

Leave a Reply

Your email address will not be published.