ACCA paper f3 management accounting

ACCA Paper F2 – Management accounting Course slides Syllabus A The nature and purpose of cost and management accounting B Cost classification, behaviour and purpose C Business mathematics and computer spreadsheets D Cost accounting techniques E Budgeting and standard costing F Short-term decision-making techniques Slide Format of the Exam Format of the Exam mark question 10 questions mark questions 40 questions Total Slide Marks 10 Paper based exam: All multiple choice with a choice of or answers Predominantly „wordy‟ questions 80 Paper based exam: All multiple choice with a choice of answers including words and calculations 90 The BPP Learning Media classroom slides What these slides cover? – A selection of key areas of the syllabus Using the slides – Use the slides as a point of reference – Add detail by talking around the slides (eg using material from the corresponding Study Text chapter) – Consider adding slides yourself to suit your course – Recommend students attempt appropriate questions from the Practice & Revision Kit Slide Chapter Study Text Chapter Information for management Purpose • Assist management in running their business to achieve an overall objective • What is the overall objective of a business? Slide 10 Data and information • Data is the RAW MATERIAL • Information is the PROCESSED DATA Slide 11 Planning, control and decision making • Planning – Long term strategies – Short term targets • Control – Performance of the organisation – Review corporate plan • Decision making – autonomy of managers Slide 12 Key roles of a management accountant • Costing • How to put a cost on our products and services • Decision-making • What to produce/how should we finance it etc • Planning • Assessment of business requirements/budgeting • Control • Assessing inefficiencies • Performance Evaluation • Comparison to targets Slide 13 Chapter Study Text Chapter Cost classification Relevant cost - labour Full capacity E.g labour is currently working on product A Alternative calc Product A $ $ Sales revenue 50 Lost cont‟n 42 Materials (3) Add back labour _ Labour (1hr) (5) _ Loss to business 47 Contribution 42 Relevant cost Slide 134 Deprival value • How to find the relevant cost of an asset Lower of Replacement cost Higher of Net realisable value Slide 135 Value in use Single limiting factor analysis Identify limiting factor Calculate contribution per unit Calculate contribution per limiting factor Rank products Prepare a production plan Slide 136 Chapter 19 Study Text Chapter 19 Linear programming Limited resources • A business needs to identify the optimal production plan for utilising its resources to maximise profit • techniques – Single limiting factor – Linear programming (>1 limiting factor) Slide 138 Example A business manufactures products – garden gnomes and garden statues Information for one unit of each product is given below: Gnome Statue Contribution $6 $9 Material 2kg 4kg Labour hours hours There are only 80 kg of material available and 180 hours of labour Demand for the statues will not be above 10 units per week Slide 139 Linear programming steps Define variables – let g = number of gnomes produced per week – let s = number of statues produced per week – let k = contribution per week Slide 140 Linear programming steps Establish constraints – subject to: • • • • Materials Labour Demand Non-negativity 80 180 Formulate objective function – Max k = 6g + 9s Slide 141 2g + 4s 5g + 6s s 10 g,s > Linear programming steps Plot constraints on graph – Find co-ordinates • Materials 2g+4s=80 When g=0, s=20 s=0, g= 40 • Labour 5g+6s=180 When g=0, s= 30 s=0, g=36 • Demand • Non-negativity Slide 142 s = 10 g,s > Linear programming steps s Materials: 2g + 4s = 80 30 Labour: 5g + 6s = 180 Demand : s = 10 20 10 Slide 143 10 g 20 30 40 Linear programming steps Identify feasible region s Materials: 2g + 4s 30 80 Labour: 5g + 6s 180 Demand : s 10 20 10 B C D A Slide 144 10 20 30 E g 40 Linear programming steps Plot objective function and identify optimal point k = 6g + 9s Pick any value for k • Say k = x = 54 • k = 54 = 6g + 9s – When g=0, s=6 – When s=0, g=9 Slide 145 Linear programming steps s Materials: 2g + 4s 30 80 Labour: 5g + 6s 180 Demand : s 10 20 k = 6g + 9s Optimal point = D 10 B C D A Slide 146 10 20 30 E g 40 Linear programming steps Solve using simultaneous equations Materials Labour 2g + 4s = 80 5g + 6s = 180 (i) (ii) Rearrange (i) to get g on own Materials g = 40 – 2s Substitute in (ii) Labour 5g + 6s = 180 (ii) 5(40 – 2s) + 6s = 180 200 – 10s + 6s = 180 200 – 180 = 4s s=5 Slide 147 Linear programming steps Substitute s = in (i) Materials 2g + 4s = 80 (i) 2g + (4 x 5) = 80 2g = 80 – 20 g = 30 Optimal production plan: 30 Gnomes Statues Contribution: k = 6g + 9s k = (6 x 30) + (9 x 5) = £225 Slide 148 ... The nature and purpose of cost and management accounting B Cost classification, behaviour and purpose C Business mathematics and computer spreadsheets D Cost accounting techniques E Budgeting... mark questions 40 questions Total Slide Marks 10 Paper based exam: All multiple choice with a choice of or answers Predominantly „wordy‟ questions 80 Paper based exam: All multiple choice with a... from the Practice & Revision Kit Slide Chapter Study Text Chapter Information for management Purpose • Assist management in running their business to achieve an overall objective • What is the