Aims

To introduce the diversified role of management accounting information in the changing competitive environment.
To examine the relevance of various management accounting techniques in organisational decision making and planning processes.

Outline Of Syllabus

Cost Allocation
Activity based costing and its use in decision making process
Budgeting techniques (e.e. Activity-based Budgeting, Zero-based Budgeting)
Management control issues
Relevance of traditional cost accounting methods

Teaching Rationale And Relationship

Lectures are used to explain the issues and to introduce concepts and techniques. Large group sessions provide feedback on student-centred learning by going through worksheets that have been prepared in advance. Students can practice and develop skills in these sessions, as well as judge individual learning through the feedback given

Assessment Rationale And Relationship

Problems with Budgeting

Budgets, say experts, control the wrong things, like head count, and miss the right ones, such as quality, customer service and even profits. Worse, they erect walls between the various parts of the company and between the company and its customers.

When you’re controlled by a budget, you are not controlling the business.

Reliance on budgets is the fundamental flaw in American management. That’s because they assume that everything important can be translated into this quarter’s or this year’s dollars, and that you can manage the business by managing the money. Wrong. Just because budget was not overspent doesn’t mean it was well spent.

For tracking where the money goes, budgets are useful. They become unfair when they are made to do more – when the budget becomes management’s main tool to gauge performance. Managers do incredibly stupid things to make budget, especially if incentive pay is at stake. They woo marginal customers. They cut prices deeply.

The worst failure of budgets is what they don’t measure. Budgets show what you spend on customer service, but not what value customers put on it.

Source: Stewart, T. A. and Tully, S.(1990) Why budgets are bad for business Fortune Vol 121 No 13 pp. 179-182