1. CIMA P2 Advanced Management Accounting
First Intro slide – change details to your own
For exams in 2016
江西财经大学会计学院 吉伟莉

3. Course Overview
Topic and Study weighting A Cost planning and analysis for competitive advantage B Control and performance management of responsibility centres C Long-term decision making D Management control and risk % 25 30 15

4. Levels of learning objectives
Evaluation
Analysis
Application
Comprehension
Knowledge

5. Introduction— A revision of basic cost accounting concepts and techniques
Absorption costing
Marginal costing
Variance analysis
First Intro slide – change details to your own

6. Basic cost accounting concepts
Cost classfication
By nature
By traceablity
By function
By behaviour
Materials cost
labour cost
Expenses
Direct cost
Indirect cost
Production cost
Administration cost
Selling cost
Distribution cost
R&D cost
Fixed cost
Variable cost
Mixed cost

7. Total Production Costs
Absorption costing
Total Production Costs
Direct Costs
Indirect Costs
(overheads)
Allocate & Apportion
COST UNIT
Allocate
COST CENTRES
Production 1
Production 2
Service
Production 1
Production 2
Reapportion
Absorb
Example: P8-Question 1

8. Cost card – marginal costing
$/unit
Direct materials X
Direct labour X
Variable overhead X
Marginal cost X
Used to value inventory under Marginal costing
Fixed overheads X
Full product cost X
Used to value inventory under Absorption costing
Chat about how some businesses prefer to focus on VC only, as treat FC as a period cost
Stress the main difference between the two methods is inventory valuation I.e. FC treated as period vs product costs

9. Reconciling profit figures
Difference in profit=Change in inventory*OAR/unit
Absorption costing profit
Add: ?
Less: ?
Marginal costing profit
Example: P12-Question 6

10. Variances analysis—basic calculation
Standard Cost Variances
Quantity Variance
Price Variance
The difference between the actual price and the standard price
The difference between the actual quantity and the standard quantity
Price variances result when we pay an actual price for a resource that differs from the standard price that should have been paid. Quantity variances are caused by using an actual amount of a resource that differs from the standard amount that should have been used.

11. Computing Variances Price Variance Quantity Variance
Actual Quantity Actual Quantity Standard Quantity × × × Actual Price Standard Price Standard Price
Price Variance
Quantity Variance
Standard price is the amount that should have been paid for the resources acquired.
Here’s a general model for computing standard cost variances. We multiply the actual quantity times the actual price and compare that to the actual quantity times the standard price. The difference is the price variance. Then we compare the actual quantity times the standard price to the standard quantity at the standard price. The difference is the quantity variance. Standard price is the amount we should pay for the resource acquired.

12. Materials mix and yield variances
Materials costs
Total variance
Price variance
Usage variance
Yield variance
Mix variance
Note: Only when, (1) a product requires two or more raw materials; (2)the proportions of the materials are changeable and controllable.

13. Planning variances VS operational variances
Total Variances
Operational Variance
Planning Variance
Caused by inaccurate
planning/faulty standards
Caused by adverse
/favourable
operational performance
Price variances result when we pay an actual price for a resource that differs from the standard price that should have been paid. Quantity variances are caused by using an actual amount of a resource that differs from the standard amount that should have been used.

14. This organization has entirely too much overhead!
End of Introduction
This organization has entirely too much overhead!