ACCA FMA Accounting - OpenTuition

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SeOpenTuition.comFree resources for accountancy studentsACCAF2FIAFMAptem20 be15 r/Dex ecam ems beManagementAccountingPlease spread the word about OpenTuition, sothat all ACCA students can benefit.ONLY with your support can the site exist andcontinue to provide free study materials!Visit opentuition.com for the latest updates watch the free lectures that accompany thesenotes; attempt free tests online;get free tutor support, and much more.OpenTuition Lecture Notes can be downloaded FREE from http://opentuition.comCopyright belongs to OpenTuition.com - please do not support piracy by downloading from other websites.r

The best thingsin life are freeIMPORTANT!!! PLEASE READ CAREFULLYTo benefit from these notes you must watch the freelectures on the OpenTuition website in which weexplain and expand on the topics coveredIn addition question practice is vital!!You must obtain a current edition of a Revision / ExamKit from one of the ACCA approved content providersthey contain a great number of exam standardquestions (and answers) to practice on.You should also use the free “Online Multiple ChoiceTests” and the “Flashcards” which you can find on on theOpenTuition website.http://opentuition.com/acca/

December 2015 Examinations Paper F2ACCA F2 / FIA FMAFree lectures are available on 1920212223242526Accounting for Management Sources of Data Presenting Information Cost Classification Inventory Control Accounting for labour Accounting for Overheads The Management Accountant’s Profit Statement – Absorption Costing The Management Accountant’s Profit Statement – Marginal Costing Process Costing – Introduction Process Costing – Losses Process Costing – Work-in-Progress Process Costing – Joint Products Alternative cost accounting Budgeting Behavioural aspects of budgeting Semi-Variable Costs Time Series Analysis Index Numbers Interest Investment Appraisal Variance Analysis Performance Measurement Overview Financial Performance Measurement Non-financial performance measurement Divisional Performance Measurement Answers To Examples Answers To Multiple Choice Tests 3139143147171Visit OpenTuition.com and use our FREE Online Multiple Choice TestsOpenTuition Lecture Notes can be downloaded FREE from OpenTuition.comCopyright belongs to OpenTuition.com - please do not support piracy by downloading fromother websites.Visit opentuition.com for the latest updates, watch free video lecturesand get free tutors’ support on the forumsFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forumsa

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December 2015 Examinations Paper F2ACCA F2 / FIA FMAFree lectures are available on opentuition.comFORMULAEFORMULAE SHEETRegression analysisa y b xnn y b xa n xy- x ynn2n x2 -( x) y b xa nn xy- x ynb n xy- x y2n x -( x)2r 2 n xy- x y-( x)2 )(n y 2 -( y)2 )(n xb n x2 -( x)2n xy- x yr 222C0Dn x-( x))(n y 2 -( y)2 )( Economic order n xy- x yquantityCh r (n x2 -( x)2 )(n y 2 -( y)2 )2C0D 2C0DCh 2C0DDCh (1- ) ChR batchEconomic2C0Dquantity DCh (12CDR)0 DCh (1- )Rb Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forumsi

iiDecemberDecember 20152011 ExaminationsExaminations ACCA F2 /PaperFIA FMAF2Formulae Chapter 2 8Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums

December 20112015 ExaminationsExaminations DecemberACCA F2 /PaperFIA FMAF2Formulae Chapter 2 End of Question Paper9Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forumsiii

December 2015 Examinations ACCA F2 / FIA FMAFree lectures are available on opentuition.comFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forumsiv

December 2015 Examinations Chapter 1ACCA F2 / FIA FMAFree lectures are available on opentuition.comACCOUNTING FOR MANAGEMENT1IntroductionThe purpose of management accounting is to assist management in running the business in waysthat will improve the performance of the business.2Data and informationOne way of assisting management is to provide them with good information to help them withtheir decisions.The information can be provided to them in different ways, but is usually in the form of reports. Forexample, a report analysing costs of producing each of several products may assist management indeciding which products to produce.It is the management accountant who will be expected to provide the information, and in order todo so he/she needs to collect data. Data consists of the facts that are gathered and stored. Data hasno clear meaning until it is processed – analysed and sorted – into information.3What makes good information?Good quality information should:have a purpose and be relevant for the purpose be timelybe understandable (to the manager using it)be accuratebe complete (but not excessive)be communicated to the right personbe communicated by an appropriate channel (for example, be printed or be sent electronically)Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums1

2December 2015 Examinations ACCA F2 / FIA FMAAccounting for Management 4Chapter 1The main managerial processesThe main areas of management accounting are:CostingCost accounting is identifying the cost of producing an item (or providing a service) in order to,for example, assist in deciding on a selling price. 5Planninge.g. plan how many staff will be required in the factory next yearDecision makinge.g. decide on what selling price to charge for a new productControle.g. check month-by-month whether the company is over or under spending on wagesThe different levels of planning strategic planninglong-term plans (e.g. 5 to 10 years) for the businesse.g. what new offices to open? / what new products to launch?tactical planningmedium-term, more detailed, plans – usually involving producing budgets for the next yeare.g. how many staff to employ next year?operational planningshort-term planning and decisionse.g. which supplier to choose for a purchase next weekFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums

December 2015 Examinations ACCA F2 / FIA FMAAccounting for Management 6Chapter 1 Comparison of management accounting with financial accountingE xample 1Financial AccountingManagement AccountingFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums3

4December 2015 Examinations ACCA F2 / FIA FMAAccounting for Management Chapter 1TESTQ uestion 1The following statements relate to financial accounting and to cost accounting:(i) The main users of financial accounting information are external to an organisation.(ii) Cost accounting is that part of financial accounting which records the cash received and paymentsmade by an organisation.Which of the following statements are true?AStatements (i) and (ii) are both correct.BOnly statement (i) is correct.COnly statement (ii) is correct.Q uestion 2Data is information that has been processed in such a way as to be meaningful to its recipients.Is this statement true or false?ATrueBFalseQ uestion 3The following statement refers to a quality of good information:The cost of producing information should be greater than the value of the benefits of that information tomanagement.Is this statement true or false?ATrueBFalseFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums

December 2015 Examinations Chapter 2ACCA F2 / FIA FMAFree lectures are available on opentuition.comSOURCES OF DATA1IntroductionThe management accountant needs data in order to be able to process it into information.This chapter lists various sources of data and also various sampling techniques.2Primary and secondary sources of dataPrimary data are data that have been collected for the specific purpose.Secondary data are data that have been collected for some other purpose but which we then usefor our purposes.3Internal and external sources dataInternal data are data collected from our own records. These are the main source of primary data.External data are data collected from elsewhere – e.g. the internet, government statistics, financialnewspapers. These will be secondary data.4SamplingIt is common to collect data from a sample rather than from the whole population. Data from thesample are used as representative of the whole population.5Sampling methodsYou should be aware of the following methods of sampling: random samplingEvery item in the population has an equal chance of being selectedsystematic samplingSelect (for example) every 10th item in the populationFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums5

6December 2015 Examinations ACCA F2 / FIA FMASources of Data stratified sampling multistage sampling cluster samplingChapter 2 Split the population into groups, and then select at random. For example, if 60% of thepopulation are women and 40% are men, then 60% of the sample should be women and 40%men. For example, suppose a company has several thousand purchase invoices filed, filling 20 files.Take a random sample of (say) 5 files, and then a random sample of (say) 20 invoices fromeach of these files. For example, suppose a company has 100 offices through the country, each issuing salesinvoices.Take a random sample of (say) 5 offices and check every invoice at each of these offices. quota sampling Suppose the population is 60% women and 40% men, and that we want to question a sampleof 200 total. Decide on a quota of 120 women (60%) and 80 men (40%) and then stop peopleas they appear until we have the required number of each.Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums

December 2015 Examinations Sources of Data ACCA F2 / FIA FMAChapter 2TESTQ uestion 1A sample of people is taken with the same proportion of individuals in separate age bands as in the populationas a whole.This is an example of which type of sampling?ARandom samplingBSystematic samplingCStratified samplingDCluster samplingQ uestion 2It was decided to take a sample by selecting the 12th item and thereafter every 20th item.This is an example of which type of sampling?ARandom samplingBSystematic samplingCStratified samplingDCluster samplingQ uestion 3Which of the following statements about stratified sampling is true?AThe sample will not be representativeBThe structure of the sample will not reflect that of the populationCKnowledge is needed of each item in the populationDThe sample is chosen entirely at randomFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums7

8December 2015 Examinations ACCA F2 / FIA FMASources of Data Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forumsChapter 2

December 2015 Examinations ACCA F2 / FIA FMAFree lectures are available on opentuition.comChapter 3PRESENTING INFORMATION1IntroductionThe management accountant has to provide information to management to help them makedecisions, and it is important that the information is presented to them in a form that is easy forthem to use.This may be in the form of a report, or a table of figures, or as a chart or graph.Although you will not be required to produce any of these, it is important that you are aware ofthe various formats available.2TablesThese are a way of presenting actual numbers in a format that is easy to understand.e.g.Year20062007200820092010Sales ’000’s2.73.24.85.15.2Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums9

10December 2015 Examinations ACCA F2 / FIA FMAPresenting Information 3Chapter 3Charts and graphsIn many cases, management do not need to see the actual numbers (and indeed the actual numbersmay confuse them). Often a chart or graph can present the information more clearly.Simple bar chart:e.g.Compound bar chart:e.g.Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums

December 2015 Examinations Presenting Information Component bar chart:e.g.Pie chart:e.g.Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forumsACCA F2 / FIA FMAChapter 311

12December 2015 Examinations ACCA F2 / FIA FMAPresenting Information Scatter graph:e.g.Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forumsChapter 3

December 2015 Examinations Chapter 4ACCA F2 / FIA FMAFree lectures are available on opentuition.comCOST CLASSIFICATION1Cost classificationCost classification is the arrangement of cost items into logical groups. For example: by theirnature (materials, wages etc.); or function (administration, production etc.).The eventual aim of costing is to determine the cost of producing a product/service; for profitabilityanalysis, selling price determination and stock valuation purposes.Cost unitA cost unit is a unit of product or service in relation to which costs may be ascertained.The cost unit should be appropriate to the type of business, for example:E xample 1Suggest appropriate cost units for the following businessesSolutionBusiness Appropriate cost unitCar manufacturerCigarette manufacturerBuilderAudit companyFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums13

14December 2015 Examinations ACCA F2 / FIA FMACost Classification Chapter 4Types of expensesProduction/manufacturing costsAdministration costsSelling and distribution costsTOTAL EXPENSES XXXXOnly the production costs will be relevant in costing.Direct costsDirect costs are those costs which can be identified with and allocated to a particular cost unit.TOTAL DIRECT COSTS PRIME COSTE xample 2Direct costsIndirect production costs (overheads)Indirect production costs (known as production overheads) are those costs which are incurred inthe course of making a product/service but which cannot be identified with a particular cost unit.E xample 3Indirect production costsTOTAL PRODUCTION COST PRIME COST PRODUCTION OVERHEADSFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums

December 2015 Examinations ACCA F2 / FIA FMACost Classification Chapter 4Non-production costsOther costs required to run the business.E xample 4Non-manufacturing/production costsTOTAL COSTS PRODUCTION COSTS NON-PRODUCTION COSTS2Cost behaviourIt is expected that costs will increase as production increases (i.e. as output increases) but theexact way in which costs behave with output may differ.E xample 5Types of behaviour(a)Variable cost(b)Fixed cost(c)Stepped fixed cost(d)Semi variable/fixed costFree ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums15

16December 2015 Examinations ACCA F2 / FIA FMACost Classification Chapter 4Linear assumptionFor this examination we will assume that total variable costs vary linearly with the level ofproduction (or that the variable cost per unit remains constant). In practice this may not be thecase, but we will not consider the effect of this until later examinations.Behaviour of manufacturing costsWith the linear assumption all costs can be categorised as either fixed or variable. This fits togetherwith previous definitions:Direct costsBy their nature direct costs will be variable costs.Indirect costs/overheadsOverheads can be fixed or variableFixedVariableDirect costsX Production overheads Non-manufacturing costs Semi-variable costsIt is necessary to determine the fixed and variable elements of semi-variable costs. A methodknown as ‘High-Low’ can be used to establish the fixed and variable elements. This technique isbest illustrated by the use of an example.E xample 6The total costs of a business for differing levels of output are as follows:Output(units)2001,000(a)(b)Total Costs( ’000)30110What are the fixed and variable elements of the total cost using the High-Low method?Describe the relationship between the output and costs in the form of a linear equation.Free ACCA course notes Free ACCA lectures Free tests Free tutor support StudyBuddy Largest ACCA forums

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December 2015 Examinations ACCA F2 / FIA FMA iii FormulaE Chapter 2 December 2011 Examinations Paper F2 iii. Free ACCA re e t Free ACCA ere t Free e t Free r ppr t tudyB t Lare ACCA r December 2015 Examinations ACCA F2 / F

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