Paper 5: Advanced Management Accounting (One paper – Three hours – 100 marks)
1. Cost Management
(a) Developments in the business environment; just in time; manufacturing resources planning; (MRP); automated manufacturing; synchronous manufacturing and back flush systems to reflect the importance of accurate bills of material and routings; world class manufacturing; total quality management.
(b) Activity based approaches to management and cost analysis
(c) Analysis of common costs in manufacturing and service industry
(d) Techniques for profit improvement, cost reduction, and value analysis
(e) Throughput accounting
(f) Target costing; cost ascertainment and pricing of products and services
(g) Life cycle costing
(h) Shut down and divestment.
2. Cost Volume Profit Analysis
(a) Relevant cost
(b) Product sales pricing and mix
(c) Limiting factors
(d) Multiple scarce resource problems
(e) Decisions about alternatives such as make or buy, selection of products, etc.
3. Pricing Decisions
(a) Pricing of a finished product (b) Theory of price (c) Pricing policy (d) Principles of product pricing (e) New product pricing (f) Pricing strategies (g) Pricing of services (h) Pareto analysis
4. Budgets and Budgetary Control
The budget manual, Preparation and monitoring procedures, Budget variances, Flexible budgets, Preparation of functional budget for operating and non-operating functions, Cash budgets, Capital expenditure budget, Master budget, Principal budget factors.
5. Standard Costing and Variance Analysis
Types of standards and sources of standard cost information; evolution of standards, continuous -improvement; keeping standards meaningful and relevant; variance analysis; disposal of variances.
(a) Investigation and interpretation of variances and their inter relationship
(b) Behavioural considerations.
6. Transfer pricing
(a) Objectives of transfer pricing (b) Methods of transfer pricing (c) Conflict between a division and a company (d) Multi-national transfer pricing.
7. Cost Management in Service Sector
8. Uniform Costing and Inter firm comparison
9. Profitability analysis - Product wise / segment wise / customer wise
10. Financial Decision Modeling (a) Linear Programming (b) Network analysis - PERT/CPM, resource allocation and resource leveling (c) Transportation problems (d) Assignment problems (e) Simulation (f) Learning Curve Theory
Sources: Institute of Chartered Accountants of India