Unit 14: Advanced Management Accounting

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Unit 14:Advanced ManagementAccountingUnit codeY/508/0537Unit level5Credit value15IntroductionThe overall aim of this unit is to develop students’ understanding of managementaccounting. The focus of this unit is on critiquing management accountingtechniques and using management accounting to evaluate company performance.Students will explore how the decisions taken through the use of managementaccounting techniques influence managerial behaviour across an organisation.On successful completion of this unit students will be in a position to support anorganisation to create value through effective decision-making where managementaccounting is used, to some degree, to control members of an organisation. Inaddition, students will have the fundamental knowledge and skills to progress on toa higher level of study.Learning OutcomesBy the end of this unit students will be able to:1Analyse the purpose for developing and presenting financial information.2Evaluate the use of management accounting techniques to supportorganisational performance.3Analyse actual and standard costs to control and correct variances.4Evaluate how a changing business environment impacts on managementaccounting.Pearson BTEC Levels 4 and 5 Higher Nationals in BusinessSpecification – Issue 3 – December 2016 Pearson Education Limited 2016143

Essential ContentLO1 Analyse the purpose for developing and presenting financialinformationUsers of financial information:This would include investors, senior management, banks and government.Developing financial statements:Critiquing why financial information should be developed into statements.The value of financial statements in support of a financial plan and decisionmaking.Presenting financial information:Critiquing the use of profit and loss statements, trial balances, cash flowstatements and balance sheets as methods to present financial information.LO2 Evaluate the use of management accounting techniques to supportorganisational performanceMicroeconomic techniques:These would include cost analysis, cost-volume profit, flexible budgeting andcost variances. Also consider absorption and marginal costing.Cost allocation:Considering the theoretical aspects as well as how this is applied in practice.Capital and capital budgeting:The meaning behind these terms will be discussed, their importance and theiruse. Techniques include Net Present Value (NPV), Internal Rate of Return(IRR), Discounted Cash Flow (DCF) and pay back periods.LO3 Analyse actual and standard costs to control and correct variancesActual costs:What does this mean?How is actual cost determined?How does this differ to estimated or standard costs?Standard costs:What does this mean?How is standard cost determined?How does estimating standard costs result in variances?144Pearson BTEC Levels 4 and 5 Higher Nationals in BusinessSpecification – Issue 3 – December 2016 Pearson Education Limited 2016

Variances:Variance analysis as a concept and a technique.Negative and positive variances.How can a negative variance be considered a positive and vice versa?Controlling and correcting variances:Integrating variance analysis into budget monitoring across an organisation.Reporting systems for monitoring and controlling variances.Schedule variance vs cost variance.LO4 Evaluate how a changing business environment impacts onmanagement accountingAnalysing changes to a business environment:Internal and external analysis techniques.Comparing the outcomes of analysis to inform decisions and to evaluatepossible implications for management accounting.Impact of the business environment on management accounting systems:Using technology to enhance and support processes and procedures.The role of improved communication within a system to expedite decisionmaking.Impact of change on management accounting systems:Determining the impact of different types of change.Deciding how to respond to different types of change.Ensuring effective communication and acceptance of change.Pearson BTEC Levels 4 and 5 Higher Nationals in BusinessSpecification – Issue 3 – December 2016 Pearson Education Limited 2016145

Learning Outcomes and Assessment CriteriaPassMeritDistinctionLO1 Analyse the purpose for developing andpresenting financial informationP1 Analyse the purposeand presentation offinancial information fromthe perspective ofdifferent stakeholders.M1 Evaluate how and whyfinancial informationshould be developed andappropriately presented tosupport financial planningand decision-making.D1 Critically evaluatefinancial informationsupported by effective andappropriate judgements.LO2 Evaluate the use of management accountingtechniques to support organisational performanceP2 Evaluate the use ofdifferent accountingmicroeconomic techniquesin application tosupporting organisationalperformance.M2 Evaluate the valueand importance of a widerange of accountingtechniques by assessingboth advantages anddisadvantages.LO2 & 3D2 Critically evaluate theapplication of differentaccounting techniques andvariances to supportconclusions andrecommendations.LO3 Analyse actual and standard costs to control andcorrect variancesP3 Analyse the concept ofvariance analysis in itsimportance fororganisational budgetcontrol.M3 Evaluate theadvantages anddisadvantages of differenttypes of variances.P4 Analyse actual andstandard costs to controland correct variances.LO4 Evaluate how a changing business environmentimpacts on management accountingP5 Evaluate how externaland internal factorschanging the businessenvironment impact uponmanagement accounting.146M4 Determine the impactof different types ofchange and the decisionsmade to respond to thesechanges.D3 Critically evaluate theimpact of changes, andsupport justifiedrecommendations forfuture communication andacceptance of change.Pearson BTEC Levels 4 and 5 Higher Nationals in BusinessSpecification – Issue 3 – December 2016 Pearson Education Limited 2016

Recommended ResourcesDRURY C. (2012) Management and Cost Accounting. 8th Ed. Boston: CengageLearning.EDMONDS, T. and OLDS, P. (2013) Fundamental Managerial Accounting Concepts.7th Ed. Maidenhead: McGraw-Hill.HORNGREN, C., SUNDEN, G., STRATTON, W., BURGSTAHLER, D. andSCHATZBERG, J. (2013) Introduction to Management Accounting. (Global edition)Harlow: Pearson.SEAL, W. et al (2014) Management Accounting. 5th Ed. Maidenhead :McGraw-Hill.ZIMMERMAN, J. L. (2014) Accounting for Decision-making and Control, 8th Ed. NewYork: McGraw-Hill.JournalsJournal of Business Finance and AccountingReview of Finance and AccountingLinksThis unit links to the following related units:Unit 5: Management AccountingUnit 10: Financial AccountingUnit 13: Financial ReportingUnit 15: Financial ManagementPearson BTEC Levels 4 and 5 Higher Nationals in BusinessSpecification – Issue 3 – December 2016 Pearson Education Limited 2016147

Unit 14: Advanced Management Accounting Unit code Y/508/0537 Unit level 5 Credit value 15 Introduction The overall aim of this unit is to develop students’ understanding of management accounting. The focus of this unit is on critiquing management accounting techniques and using management accounting to evaluate company performance. Students will explore how the decisions taken through the .

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