Introductory description

This module is only open to WBS undergraduate students, and some students taking joint degrees with WBS and another department. Students from other departments cannot take this module. To find detailed availability and to apply for this module, log in to my.wbs.ac.uk using your normal IT login details and apply via the my.wbs module application system. Once you’ve secured a place on my.wbs you should apply via your home department’s usual process, which usually takes place via eVision. Note that you do not require the module leader’s permission to study a WBS module, so please do not contact them to request it.

This module is designed to provide an initial introduction to management accounting and explores the key underpinning concepts in the subject area including cost classifications and the major approaches to costing as well as introducing budgeting and cost control. The module prepares students to further explore the subject area in future modules.

Module web page

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

Introduction to Management Accounting

Management accounting definition; contrast management accounting and financial accounting; the decision making process;
forces of change in management accounting; emerging new themes in management accounting; functions of management
accounting; management accounting and ethical conduct.

Introduction to Costs Terms and Concepts
Cost object, Direct and Indirect costs, Fixed, Variable, Semi-Variable, Stepped Fixed costs; Product and Period costs, Incremental
and Marginal costs, Opportunity and Sunk costs.

Cost-Volume-Profit (CVP) Relationships
CVP single product decisions; contribution margin; breakeven point; margin of safety; CVP multiple product mix decisions;
sensitivity analysis.

Cost Assignment
Assignment of direct and indirect costs; different costs for different purposes; cost benefit issues and cost system design; plant-wide overhead rate; the two stage allocation process, reconciliation of Absorption costing and Marginal costing profit statements.

Activity Based Costing Systems
Traditional vs. ABC costing systems; volume-based and non-volume-based cost drivers; designing ABC systems; pros and cons.
of ABC; ABC in service organizations; Implementation of ABC.

Pricing Decisions
Factors affecting pricing decisions; role of cost information in pricing decisions; pricing setting firm facing short-run/long-run pricing
decisions; pricing taking firm facing short-run/long-run product mix decisions; pros and cons of cost-plus pricing; pricing strategies;
pricing in practice.

The Budgeting Process
Meaning of budgeting; different purposes of budgeting; preparation of master and cash budgets; zero-based budgeting; incremental budgeting; problems with budgeting.

Standard Costing and Variances Analysis
Introduction to standard costing system; purposes of a standard costing system; setting of standards, various bases used for
setting standards; calculation of basic variances (material, labour, overhead, sales margin); reconciliation actual profit with
budgeted profit.

Learning outcomes

By the end of the module, students should be able to:

• Define the mechanics, uses, and arguments relating to marginal, absorption, and activity-based costing systems.
• Apply techniques to estimate and predict costs including the use of relevant software.
• Explain and apply pricing techniques in a range of contexts.
• Discuss the role of budgeting and standard costing in the planning, control and resource allocation process.
• Prepare budgets and make use of spreadsheets.
• Calculate and interpret standard costs and variance analysis.
• Discuss the behavioural/social effects of management accounting information.
• Explain the multi-disciplinary nature of the subject.
• Demonstrate analytical, and problem solving skills.

Indicative reading list

Required (Core) Text:

Drury, C., (2024) Management and Cost Accounting, (12th edition), Cengage Learning.

Other Useful Texts:
Mowen, M. M., Hansen, D.R., and Heitger, D.L. (2018). Managerial Accounting: The Cornerstone of Business Decision Making (Seventh Edition), Cengage Learning.
Bhimani, A, Horngren, C.T., Datar, S.M., and Rajan, M., (2015), Management and Cost Accounting (6th edition), Pearson.
Drury, C., (2019) Management Accounting for Business, (7th edition), Cengage Learning, Hampshire.
Atrill, P., and E. McLaney (2015), Management Accounting for Decision Makers, Pearson.
Noreen, E., Brewer, P., and Garrison, R., (2014), Managerial Accounting for Managers (3rd edition), McGraw-Hill Education.
Hopper, T., D. Northcott, and R. Scapens (2007), Issues in Management Accounting (3rd edition), Prentice Hall.
Current research may also be found in such journals as Management Accounting Research (UK), Journal of Management Accounting Research (US), Journal of Cost Management (US), Accounting Organisations and Society, Critical Perspectives in Accounting, and Accounting Auditing and Accountability Journal. Practitioner's articles may also be found in the CIMA journal Financial Management and in the US the journal Management Accounting.

Subject specific skills

Use excel to solve management accounting problems creating budgets, cash budgets, variances, absorption costing and marginal
costing.

Transferable skills

Demonstrate written communication skills.
Demonstrate a basic knowledge of the use of Spreadsheets.
Demonstrate group work skills, oral communication and presentation skills.