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Regular version of the site

Management Accounting

Academic Year
Instruction in English
ECTS credits
Course type:
Elective course
3 year, 1-4 module


Course Syllabus


The Management Accounting is a full year elective course for the 3-rd year ICEF students. The course is taught in English and finally examined by the University of London international programme or internally in ICEF. The course is focused on the process of making management decisions based on the financial and nonfinancial information about transactions and performance of an enterprise. This information can be collected, processed and presented in certain way to assist in this process. Among the topics covered are profitability decisions for different types of business activities or business units, pricing decisions, choosing from alternative options while deciding on additional costs or expenses or additional sales opportunities within limited production capacities. Special attention is given to the application of the cost accounting methods: marginal and absorption costing, job costing and process costing. Cost analysis has a significant influence on the pricing decisions and transfer prices. A large part of the course is devoted to the planning and budgeting process in the company as a management tool. The discussion of modern methods of performance management such as EVA, RI and Balanced Score Card brings a special value of the program. The course has a Principles of Accounting course as a prerequisite.
Learning Objectives

Learning Objectives

  • The students get the knowledge about modern techniques used in the process of management accounting and analysis of costs in a business. They should be able to apply it in different business situations where they need to calculate costs for products or make a decision about a price. The students should understand major types of managerial decisions, that should be made in the process of formulating and implementing business strategy, they should have a general knowledge about major factors, influencing these decisions, and about major tools of planning, analysis and control of results, the usage of which significantly influences the success of the strategy implementation.
Expected Learning Outcomes

Expected Learning Outcomes

  • • Understands the different steps in decision making, planning and control • Critically evaluates the uses of managerial accounting information for strategic decision making in various business contexts • Discusses the changing role of management accounting • Describes the value chain and indicate its strategic purpose
  • • Applies job and batch costing techniques • Applies overhead absorption and cost allocation methods using blanket and departmental rates • Evaluates the use of traditional costing methods in decision making • Calculates the full production cost using full absorption costing method
  • • Prepares process accounts dealing with normal and abnormal loss • Calculates the value of finished goods and Work-in-progress (WIP) using weighted average and FIFO methods
  • • Analyses the various activities of a firm in order to attach appropriate costs and link them with products and services • Calculates the full cost of product/ service/ department/ client using activity-based costing • Understands the advantages and limitations of activity-based costing and its uses by different industries • Discuss the usefulness of activity-based costing for managerial decision-making purposes
  • • Performs calculations to determine break-even point, margin of safety and output level to achieve a target profit, • Apply cost-volume-profit analysis to company producing multiple products
  • • Understands and applies appropriate quantitative methods of cost behavior analysis • Understands the context in which learning curves occur and performs learning curve analysis
  • Able to critically evaluate the proposed options for management decisions and develop and justify proposals for their improvement, taking into account the criteria of efficiency and risks Able to distinguish relevant and irrelevant information • Performs calculations for special pricing decisions • Performs calculations for make or buy decisions • Identifies the categories of sunk and opportunity costs • Applies an effective decision-making process to make decisions
  • • Solves resource allocation problems in situations of several capacity constraints and using linear programming and shadow pricing • Explains the purpose of using probability analysis, decision trees, maximin, maximax and regret criteria to help to Analyse uncertainty and solve problems relating to these issues
  • • Distinguish between the challenges of short- and long-term pricing • Describe the target costing and perform calculations to determine target cost • Discuss the purpose and scope of customer profitability analysis
  • • Describes the methods of determining the long term viability of the capital investment decisions, perform calculation and comment on the results • Discusses strengths and limitations of the different methods identified • Incorporates measures of uncertainty into analysis • Describes lifecycle costing, provide calculations relating to product lifecycle and explains its relevance to pricing policy
  • • Designs and perform calculations to prepare budgets • Links budgets and budgeting to a company’s strategy
  • • Recommends how to use budgets for control and responsibility accounting • Designs flexible budgets and uses them for calculation of variances and management control • Produces flexed budgets and calculates variances that reconcile budgeted and actual profit
  • • Explains the need for mix and yield variance • Calculates mix and yield variance • Explains how planning and operating variances help to interpret performance • Calculates planning and operating variances
  • • Discuss the purpose and limitations of creating divisions • Design and evaluate divisional performance measurement systems • Devise and utilize performance measurement indicators
  • Describes the different purposes of transfer pricing • Describes and provide calculations of impacts on divisions of five transfer pricing methods: market-based, full cost, full cost/ marginal cost with mark-up, marginal cost +opportunity cost, negotiated price and dual pricing •Explains why market-based transfer price is advised in competitive market situations
  • •Explains the limitations of full cost-based pricing and transfer price methods which can be used to resolved conflicts between decision-making and performance evaluation •Discusses transfer pricing in international situations
  • • Explains and gives examples of value added and non-value added activities • Explains benchmarking, business process engineering, just in time and lean accounting • Compiles and explains the results of a cost of quality report
  • • Describes the purpose and use of the balanced scorecard • Explains the performance measures used in four perspectives
Course Contents

Course Contents

  • 1. Managerial Accounting. Costs classification.
    Definition of the managerial accounting, goals and objectives. Financial and managerial accounting - comparison. Decision making process. Cost terms and concepts. Cost classification: direct\indirect, fixed\variable, manufacturing (material, labour, overhead) and other (administrative, sales, financial). Inventoriable and period costs. Value chain.
  • Topic 2. Full absorption costing methods
    Reallocating cost centre costs to products. Allocation of direct and indirect costs. Accounting for overheads. Allocating manufacturing overheads to cost centres. Allocation of support department costs. Methods of allocation. Purpose of allocation. . Under- and overabsorption of overheads. Limitations on full absorption costing.
  • Topic 3. Inventory and process costing and capacity management
    Process costing. Influence of the calculation method on the cost of production, cost of inventory and measuring of profit. Accounting for No Beginning and Zero Ending WIP. Accounting for Zero Beginning and some Ending WIP. Accounting for Some Beginning and some Ending WIP. Weighted-Average and FIFO methods. Transferred-In costs. Capacity concepts and capacity management.
  • Topic 4. Activity based costing and activity based management
    Activity cost centres. Cost drivers. Benefits of ABC. Activity based budgeting. Profitability analysis.
  • 5. Cost-Volume-Profit Analysis.
    Break-even, contribution margin for a particular product, making decisions about additional costs, increasing sales price, target pricing and target operating income, operational leverage.
  • Topic 6. Application of cost-volume-profit analysis
    Sensitivity analysis. Cost drivers and estimation methods. Determining fixed and variable elements of cost. Learning curve analysis.
  • 7. Relevant information (costs and proceeds) for decision making.
    Special decisions about pricing: one-time only special orders, short-term and long-term orders, product mix decisions with capacity constraints. Decisions on equipment replacement: irrelevance of past costs. Insourcing or outsourcing decisions. Buy or make decisions. Opportunity costs. Bottlenecks.
  • Topic 8. Decision making with constraints and uncertainty
    Resource allocation with constraining factors. Theory of Constraints, Throughput-Margin analysis. Linear programming. Uncertainty of information – probability analysis. Decision trees. Maximin, maximax and regret criteria. Performance evaluation.
  • Topic 9. Theory and practice of cost-based pricing.
    Marketing aspects of pricing. Costing and pricing. Making pricing decisions. Short-run pricing. Long-run pricing. Cost plus pricing. Target costing. Customer profitability analysis.
  • Topic 10. Long-term decision making, capital budgeting and lifecycle costing.
    Calculation of NPV (net present value), IRR (internal rate of return), payback period and accounting rate of return. Evaluation of investments. Lifecycle costing and budgeting.
  • Topic 11. Strategic budgeting
    Budgets and the Budgeting Cycle. Strategic plans and operating plans. Master Budget. Rolling budgets. Developing an operating budget. Different budgets. Human aspects, organizational aspects.
  • Topic 12. Budgeting and control
    Management by exception and the use of variances. Static and flexible budgets. Standard-costing for cost calculation, analysis of variances. Direct materials Variances, Direct Labour Variances, Variable Overhead Variance, Fixed Overhead Variance, Sales and Gross Margin Variance, Sales Volume and production Volume Variances. Kaizen budgeting.
  • Topic13. Variance analysis – advance issues
    Material Mix and yield variances. Planning and operating variances. Sales mix and Sales quantity variance
  • Topic 14. Divisional performance measurement systems
    Purposes and limitations of creating divisions. Investment centres. Goal congruence. ROI. Divisional acceptance of new investment opportunities. Residual income (RI), Economic value added (EVA). Non-financial measures of performance.
  • Topic 15. Transfer pricing and its effect on performance management systems
    Different purposes of transfer pricing. Different methods of transfer pricing. Conflicts between decision making and performance evaluation of divisions. Multinational transfer pricing.
  • Topic 16. Cost management, JIT and environmental accounting
    Value added and non-valued added costs. Quality costs management. JIT. Lean accounting.
  • Topic 17. Strategic performance management – the use of the non-financial performance measures
    Purpose and use of balanced scorecard.
Assessment Elements

Assessment Elements

  • non-blocking October written examination
    Для студентов она дистанте экзамен проводится в письменной форме с использованием асинхронного прокторинга. Экзамен проводится на платформе https://hse.student.examus.net). К экзамену необходимо подключиться за 10 минут до начала. Проверку настроек компьютера необходимо провести заранее, чтобы в случае возникших проблем у вас было время для обращения в службу техподдержки и устранения неполадок. Компьютер студента должен удовлетворять требованиям: 1. Стационарный компьютер или ноутбук (мобильные устройства не поддерживаются); 2. Операционная система Windows (версии 7, 8, 8.1, 10) или Mac OS X Yosemite 10.10 и выше; 3. Интернет-браузер Google Chrome последней на момент сдачи экзамена версии (для проверки и обновления версии браузера используйте ссылку chrome://help/); 4. Наличие исправной и включенной веб-камеры (включая встроенные в ноутбуки); 5. Наличие исправного и включенного микрофона (включая встроенные в ноутбуки); 6. Наличие постоянного интернет-соединения со скоростью передачи данных от пользователя не ниже 1 Мбит/сек; 7. Ваш компьютер должен успешно проходить проверку. Проверка доступна только после авторизации. Для доступа к экзамену требуется документ удостоверяющий личность. Его в развернутом виде необходимо будет сфотографировать на камеру после входа на платформу «Экзамус». Также вы должны медленно и плавно продемонстрировать на камеру рабочее место и помещение, в котором Вы пишете экзамен, а также чистые листы для написания экзамена (с двух сторон). Это необходимо для получения чёткого изображения. Во время экзамена запрещается пользоваться любыми материалами (в бумажном / электронном виде), использовать телефон или любые другие устройства (любые функции), открывать на экране посторонние вкладки. В случае выявления факта неприемлемого поведения на экзамене (например, списывание) результат экзамена будет аннулирован, а к студенту будут применены предусмотренные нормативными документами меры дисциплинарного характера вплоть до исключения из НИУ ВШЭ. Если возникают ситуации, когда студент внезапно отключается по любым причинам (камера отключилась, компьютер выключился и др.) или отходит от своего рабочего места на какое-то время, или студент показал неожиданно высокий результат, или будут обнаружены подозрительные действия во время экзамена, будет просмотрена видеозапись выполнения экзамена этим студентом и при необходимости студент будет приглашен на онлайн-собеседование с преподавателем. Об этом студент будет проинформирован заранее в индивидуальном порядке. Во время выполнения задания, не завершайте Интернет-соединения и не отключайте камеры и микрофона. Во время экзамена ведется аудио- и видео-запись. Процедура пересдачи проводится в соответствии с нормативными документами НИУ ВШЭ.
  • non-blocking December written examination
  • non-blocking March written examination
  • non-blocking Final written examination
    University of London exam or internal ICEF May test
  • non-blocking home assignments 1 semester
  • non-blocking home assignments 2 semester
  • non-blocking short quizes 1 semester
  • non-blocking quizes 2 semester
  • non-blocking participation 1 semester
  • non-blocking participation 2 semester
Interim Assessment

Interim Assessment

  • Interim assessment (2 module)
    0.45 * December written examination + 0.15 * home assignments 1 semester + 0.25 * October written examination + 0.075 * participation 1 semester + 0.075 * short quizes 1 semester
  • Interim assessment (4 module)
    0.4 * Final written examination + 0.07 * home assignments 2 semester + 0.3 * Interim assessment (2 module) + 0.17 * March written examination + 0.03 * participation 2 semester + 0.03 * quizes 2 semester


Recommended Core Bibliography

  • Management and cost accounting, Drury, C., 2015

Recommended Additional Bibliography

  • Cost accounting : a managerial emphasis, Horngren, C. T., Datar, S. M., 2015