BULE HORA UNIVERSITY

COLLAGE OF BUSINESS AND ECONOMICS

Department of Accounting and Finance

Department Accounting & Finance

program BA degree in Accounting & Finance

Module M9 Cost and Managerial Accounting

Number/Title

instructor Wegene B.( Msc.) In Accounting & Finance

Module Code ACFN-3030

Objective of the This module will cover cost accumulation concepts and techniques for Product and Service
module Costing and Planning and Control, as well as Non-routine Managerial Decisions. Modern
management accountants are not only concerned with how cost data are transformed into cost
accounting information but more importantly how to use cost accounting information to aid
managerial goals. It is the case, however, that one cannot effectively use cost information
without a good understanding of how various cost accounting information are generated.
The module should develop the student's understanding, skill, and analytical ability in cost
and management accounting to the level where he or she can function effectively (and
efficiently) as a professional cost and management accountant in industry, public accounting,
management consulting, government, or personal business management.

Total ETCTS and ETCTS: 10

Credit Hours of the
module Credit Hours: 6

Courses of the Module

Course Number AcFn3032

Course Title Cost & management Accounting II

ETCTS Credits 5

Contact Hours 3
(per week)

1
 After successfully completing this course, students will be able to:
Course Objectives  Apply managerial accounting and its objectives in a way that demonstrates a
& Competences to clear understanding of ethical responsibilities.
be Acquired  Analyze cost-volume-profit techniques to determine optimal managerial
decisions.
 Prepare a master budget and demonstrate an understanding of the relationship
between the components.
 Perform cost variance analysis and demonstrate the use of standard costs in
flexible budgeting.
 Prepare analyses of various special decisions, using relevant costing and
benefits.

Course Description Cost accounting course concerns with fundamental cost concepts, behavior, and analysis and
the use of cost information to develop superior decision making process and outputs. This
course introduces the production, communication, and the use of accounting information
within the context of business activities.
.

WEEKS Course Contents

1. Cost-Volume-Profit Analysis, Absorption, and Variable

2WEEKS Costing
{1ST&2ND } 1.1 Absorption versus Direct Costing
1.2 The concept of profit contribution
1.3 Cost-volume-profit (CVP) analysis: understanding the
concepts of break-even and margin of safety
1.4 Cost Volume Profit Analysis under Absorption
Costing
1.5 The use of linear, curvilinear and step functions and
how their calculations are used to analyze cost
behavior
1.6 The concepts of cost units, cost centers and profit
centers

2. Relevant information and Decision Making

4 WEEKS 2.1 Relevant and irrelevant information
{3RD- 6TH }  Explain the concept of relevant costs and
relevant revenues and how this is potentially
different from the notion of fixed and variable
costs.
 Explain ‘sunk costs’ and why they are
considered irrelevant to decisions.
 Explain such terms as ‘opportunity costs’,
‘avoidable costs’, ‘differential costs’ and
‘incremental costs’.
2.2 Marketing Decisions
2.3 Production Decisions
3. Information for budgeting, planning and control
purposes
3.1 Objectives and concepts of budgetary systems
 Budgeting as a multi-purpose activity,
 Budgeting and behavioral influences,
 Quantitative aids in budgeting: learning curve
theory and application; limiting factors and linear
programming,
 Activity-based budgeting,
 Control theory and budgeting,

2
  Uncertainty and budgeting,
 Identification of relevance, strengths and
weaknesses of budgeting and budgetary control
3.2 Types of budgetary systems: fixed and flexible
budgets, zero-based budgets, and incremental, periodic
and continuous budgeting, Short-term vs. long-term
budgets
3.3 Monitoring and controlling performance; the
calculation of variances; the determination of the
causes of variances
3.4 Master budgets
 Manufacturing Businesses
 Merchandising Businesses

4. Standard Costing, Flexible Budgeting and Variance

5 WEEKS Analysis
{7TH - 11 TH } 4.1 The uses and limitations of standard costing methods
4.2 The determination of standards
4.3 Flexible budgets and variances
4.4 Identification and calculation of variances: sales
variances (including quantity and mix); cost variances
(including mix and yield); absorption and marginal
approaches
4.5 Identification of significant variances and their
interrelationship
4.6 The uses of planning and operational variances
4.7 Trends, materiality and controllability of variances
4.8 Uncertainty and variance analysis
4.9 Identification of relevance, strengths and weaknesses
of standard costing and variance analysis for
performance and control
5. The pricing of goods and services
5.1 Target and minimum pricing.
5.2 Price /demand relationships,
5.3 The pricing of special orders and short-life products,
5.4 Pricing in service industries,
5.5 Transfer Pricing
o Transfer Pricing: General Rule for Optimal
Transfer Price
o Transfer Pricing: Imperfectly Competitive
Intermediate Product Markets

3WEEKs 6. Responsibility Accounting

{12TH - 14tTH} 6.1 Responsibility Accounting
6.2 Responsibility centers
6.3 Performance Measurement

Assessment/ The evaluation scheme will be as follows:

Evaluation Component Weight coverage
Test 1 15% Chapter 1 &2
Test 2 15% Chapter 3 & 4
Assignment 1 5% Chapter 1 &2
Assignment 2 5% Chapter 3-6
Quiz 1 5%
Quiz 2 5%
Final Exam 50% All chapters

3
Work load in hours Hours Required
Total
Assess Tutori Self- Assign Advi ECTS
Hrs
Lectures Lab ments als Studies ment sing
64  - 22 12 64  - - 162 6

Text Book:
Text and reference  Horngren, Foster, &Datar. Cost Accounting: A
books Managerial Emphasis. 9th Ed. 1997
 Horngren, Sunden& Stratton. Introduction to
Management Accounting. 11th Ed. 1999
Reference Books
 C.T Homgren, Introduction to Management Accounting 4th
to 8 th editions, 1999 USA
 C.T. Homgren, Cost Accounting: A Managerial Emphasis
5th to 8th ecitionsprentice Hall Inc. 1982 to 1994
 Homgren, foster, &Datar, Cost Accounting A Managerial
Emphasis. 10 thEcition
L.E. Heitger Managerial Accounting 1th and 2 nd editions,
McGraw Hill , 1998, India
 GetuJemaneh, Management Accounting 1996.
 Ray H.Garrison, Managerial Accounting. 6th edition
 Caluinengler, Managerial Accounting 2nd edition
 L. Gayle Rayburn Principles of cost Accounting using a
cost Mangement Approach 4th edition Richard DIR WIN Inc.
1989.
 Robert X. Kaplan Advanced Management Accounting 1st
and 2nd edition prentice Haill, Inc, 1982 and 1989 (Chapters
2, 11,12, and 13 only)