RATIONALE

The syllabus for Paper F2,Management Accounting,introduces candidates to costing principles and techniques, and elements of management accounting which are used to make and support decision-making.

The syllabus starts by introducing the nature and purpose of cost accounting,distinguishing it clearly from financial accounting.The next section is cost classification and behaviour.This is followed immediately by applied business mathematics and the use of computer spreadsheets,which are essential for candidates to understand the measurement and behaviour of business costs and to be able to classify them accordingly.

The next area of the syllabus represents a central part of this paper and it introduces candidates to a variety of costing techniques used in business.It is followed by the preparation and use of budgeting and standard costing as essential tools for planning and controlling business costs.The syllabus finishes with an introduction to the use of management accounting in supporting decision-making.

DETAILED SYLLABUS:

A The nature and purpose of cost and management accounting

1.Accounting for management

2.Cost and management accounting versus financial accounting

B Cost classification,behaviour and purpose

1.Production and non-production costs

2.Direct and indirect costs

3.Fixed and variable costs

C Business mathematics and computer spreadsheets

1.Dealing with uncertainty

2.Statistics for business

3.Use of computer spreadsheets

D Cost accounting techniques

1.Accounting for materials

2.Accounting for labour

3.Accounting for overheads

4.Marginal and absorption costing

5.Job and batch costing

6.Process costing

7.Service/operation costing

E Budgeting and standard costing

1.Nature and purpose of budgeting

2.Functional budgets

3.Flexible budgets and standard costing

4.Basic variance analysis under absorption and marginal costing

5.Reconciliation of budgeted profit to actual profit

F Short-term decision-making techniques

1.Cost-volume-profit analysis

2.Relevant costing

3.Limiting factors

APPROACH TO EXAMINING THE SYLLABUS

The syllabus is assessed by a two hour paper-based or computer-based examination. Questions will assess all parts of the syllabus and will include both computational and non computational elements.The examination will consist of 40 two-mark questions,and 10 one-mark questions.