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Management Accounting

1

Prepared by

AMMAR MUSHTAQ KHAN

Management Accounting

2

Dear students these revision notes which you are going to read may have grammatical & spelling mistakes, if you find any one of them, please point out & let us know this will help us to recover & maintain the notes in most suitable language boundaries as much as possible for us. As the user of these notes you can not copy, reissue or reprint it without the permission of author. You are legally & ethically bound to take the permission first before doing any such thing. Thanks for your cooperation

AMMAR MUSHTAQ KHAN Ammar.acca@gmail.com 0336-5586866

Prepared by

AMMAR MUSHTAQ KHAN

Management Accounting

3

Management Accounting
Cost Accounting
Cost Accounting
• • • • • • • •

Managerial Accounting
Managerial Accounting
• • • • • •

Cost Concepts and Classifications Labor Overhead Costs Manufacturing Accounts Marginal costing & Absorption Costing Other Costing Techniques Process Costing Stock Valuation

Budget Costs Volume Profit (CVP) Analysis Pricing Decisions Standard Costing & Variance Analysis Short Term Decisions Variances

Chapter

chapter

Page # 3 4 7 10 11 14 17 20 24 32 34 37 48 49 52 58 77 103 167

Introduction One The nature & purpose of Management accounting Two Types of cost & cost behaviour Three Business mathematics Four Ordering & accounting for inventory Five Order quantities & reorder levels Six Accounting for labour Seven Accounting for overheads Eight Marginal & absorption costing Nine Relevant costing Ten Dealing with limiting factors Eleven Job , batch & process costing Twelve Services & operation costing Thirteen Budgeting Fourteen Standard costing Fifteen Spreadsheet Sixteen Terms Dictionary Seventeen Question bank Eighteen Test your knowledge Prepared by

AMMAR MUSHTAQ KHAN

Management Accounting

4

Chapter one 1 Level of planning
Strategic planning & control: Formulate long-term objectives & plans. Information at this level is in summaries form. (Directors level)

Tactical planning & control: Make short term plan for the nest year. Information at this level is in medium quantity (senior manager level) Operational planning & control Day to day planning & decision making, information is in expanded form (all manager level) Hierarchy of management tasks Strategic planning & control: Formulate long-term objectives & plans. Information at this level is in summaries form. (Directors level) Planning Activities

Tactical planning & control: Make short term plan for the next year. Information at this level is in medium quantity (senior manager level)

Operational planning & control Day to day planning & decision making, information is in expanded form (all manager level) Controlling Activities

Prepared by

AMMAR MUSHTAQ KHAN

Management Accounting

5

Responsibility accounting is based indemnifying individual parts of a business which responsibility of a single manager. Responsibility centre is an individual part of a business whose manger has responsibility for its performance

Cost centre: is a production or service location, function activity or item of equipment whose costs are identified and recorded

Revenue centre: is a part of the organization that earns sales revenue. Profit centre: a profit centre is a part of the business for which both the costs incurred & revenues earned are identified.

Investment centre: managers of investment centre are responsible for investment decisions as well as decision affecting the cost & revenue. Therefore mangers are accountable for profit & capital employed. The performance measured in term of ROCE. Manager’s Authority increases

Cost/revenue Centre

profit centre

investment centre

Managerial process of planning decision making & control *) Planning involves establishing objectives & formulating relevant strategies that can be used to achieve those objectives. *) Decision making involve...
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