Acca f2 Fma Study Text PDF Full View Dow

ACCA F2 Management Accounting Study Text Ebook for June 2013 Exam | Page 1 of 154
THIS STUDY MATERIAL IS NOT AVAILABLE OFFLINE IN ANY FORM (DVDs, CDs, PRINTED BOOKS)
ACCA 52 EBOOK JUNE 2m 3

EXAM TOPICS
Note: click the cross—reference below for easy
press Ctrl+H0me to see table ofexam topics
EXAM TOPICS ................................................................. ..

KEY TERMS ...........................................................................................
INTENDED BENEFITS OF THE E- ....................... ..
AUTHOR'S PROFILE ..................................................................
IMPORTANT! . . ... . . ... . ... . . ... . .. . . ... . ... .. . . ... . ... . . .. . ... . ... . . ... . . .. . ... . . ... . ....25
USER GUIDE .................................................................................... ..Z7
: COST CL ICATION & BEHAVIOUR ....................................... ..64

:PRESEN ' NG INFORMATION ............................................................93
: ACCOUNTING FOR MATERIALS .................................................. .. 102
COUNTING FOR LABOUR ......................................................... ..107
Exam : ABSORPTION COSTING SYSTEM ................................................ .. 110
Exam pic 8: ABSORPTION & MARGINAL COSTING ...................................... .. 112
EXam Topic 9: IOB & BATCH COSTING ................................................................... .. 114
Exam Topic 10: PROCESS COSTING SYSTEM ....................................................... .. 116
Buy Full AL'EA FZ/FMA Study Text Bunk (liflfli) at AL'EASUPPURTBIJM | SHARE | EUMMENT | FURIJMS | JOBS
AREA F5, FEI, PI, P3 Study Materials Free Demo [luwnluad E AIIEA Distance Learning Tuitinn Euurses
U
Exam Topic 11: SERVICE COSTING SYSTEM ........................................................ .. 118

Exam Topic 12: ALTERNATIVE COST ACCOUNTING ....................................... .. 120
Exam Topic 13: NATURE & PURPOSE OF BUDGETING ................................... .. 122
Exam Topic 14:
Exam Topic 15:

Exam Topic 16:
Exam Topic 17:
Exam Topic 18:
Exam Topic 19:
Exam Topic 20:
Exam Topic 21:
Exam Topic 22:
Exam Topic 23:
Exam Topic 24'
‘Kccasupportcom link at any ONE of your E 2| lill or

other accou to get any TWO exam topics above of your choice for free
not included in free version by emailing at kabuli 52@hotmail.com
or mu! Jea@accasupport.com
Email should contain web page URL where you have placed a
link and name of any TWO exam topics you Want.
Buy Full AL'EA FZ/FMA Study Text Bunk (IISIh) at AEEASUPPEIRTIIIJM | SHARE | EUMMENT | Fl]Rl.IMS | J|]BS
AREA F5, FEI, PI, P3 Study Materials Free Demu Download 5 ABBA Distance Learning Tuitinn [inurses
B
KEY TERMS
BROWSE BYKEY TERM
A Blanket Rate 0 - Factory Wide

Rate . . . . . . . . . . . . . . . . . . ..106
Absorption Costing .................. .. 106 118
Accurate .................................... .. 41 ___.I _ _ I _ . _ _ _ _ __
Achievable ............................... .. 147
Acid Test Ratio ......................... ..
Activity Based Costing (ABC)
Additive Model ...................... ..
.................. .. 104, 143
gets ............................ ..123
m Based Index Number ...... ..121
Clear ......................................... ..147
Clustered Sampling .................... ..55
Coefficient of Correlation ......... ..120
Coefficient of Determination .... .. 120
Committed Cost ....................... ..127
Competitive Benchmarking ...... ..147
Competitive Performance ........ ..147
Benchmarking ----------------------- "147 Complete .................................... ..41
Compound Interest .................. ..127
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at AEEASLIPPURTIIIJM | SHARE | EUMMENT | FURIJMS | JOBS
AREA F5, FEI, Pl, P3 Study Materials Free [Iemu Duwnlnad 5 ABBA Distance Learning Tuitinn [luurses
n
Compounding .......................... .. 127 Departmental Overhead Absorption

Rate ...................................... ..106
Consumer Price Index (CPI) ...... .. 120
Deseasonalisation .................... ..120
Contribution ............................ .. 108
Determinants ..
Control ....................................... .. 39
Control Reports ........................ .. 130 IIIIIIIIIIIIIIII n
Controllability .......................... .. 147
Controllable Cash Flows ........... ..127
Conversion Cost ....................... .. 1
Cost Centres ....................... ..

Cost Objects . . . . . . . . . . . . . . . . . . . . . . . . . . . . lIlIIIlIu
.................. .. 106
Cost Units . . . . . . . . . . . . . . . . . . . . . . . ..
shlp ............... .. 76, 77
Cost Value..
ttributable Fixed Cost..127
ounted Cash Flow ...... .. 126, 127
Discounting .............................. ..127
Discretionary Costs .................. .. 145
Dispatch Note ............................ ..98
Distribution ................................ ..51
Dividend Cover ......................... ..142
Easy to use. ................................ ..41

Delivery Note (DN) ..................... .. 98
Economy .................................. .. 143
Buy Full AEEA FZ/FMA Study Text Bunk (IiBIh) at AL'EASUPPURTBIJM | SHARE | EUMMENT | FURIJMS | JOBS
AREA F5, FEI, Pl, P3 Study Materials Free [Iemu Download 5 ABBA Distance Learning Tuitiun [luurses
n
Effective Interest Rate ............. .. 127 Flexibility .................................. ..147
Effectiveness ............................ .. 143 Forecasting ............................... .. 120
Efficiency ................................. .. 143 Free Inventory ............................ ..98
Efficiency Ratio ................ .. 104, 143 Frequency .............. ..50
Equity ....................................... .. 147 147
Equivalent Cost Units ............... ..112 .......... ..
Esteem Value ........................... .. 145 ............... ..
Exchange Value ........................ .. 1
Extrapolation ..................... ..
us Schemes ............. ..103
Heterogeneity .......................... ..143
High Low Method ....................... ..73
Holding Cost ............................. ..100
Hourly Rate Basis ..................... .. 103
Idle Time Costs ......................... ..103

Fixed P duction Overhead Capacity
Varlance ............................... .. 136 Incremental Piece Work Systemic?’
Fixed .Productlon Overhead Index Numbers ......................... ..120

Varlance ............................... ..136
Buy Full ABBA FZ/FMA Study Text Bunk (llBui) at AEEASLIPPURTIIIJM | SHARE | EUMMENT | Fl]Rl.lMS | JOBS
AREA F5, F5, Pl, P3 Study Materials Free [lemu Duwnluad 5 ABBA Distance Learning Tuitiun [luurses
n
Indirect Cost .............................. .. 62

L
Indirect Expenses ....................... .. 64
Labour Cost Variance ............... ..136
Indirect Labour .......................... .. 64
Labour Turnover ................... ..103
Indirect Materials ...................... .. 64
Life Cycle C .......... ..116
Indirect Relationship .................. .. 76
LIFO first 0 .............. ..lOO
Individual Bonus Schemes ........ .. 103
L' e t ........ ..
Information ................................ ..40

' ear Rela
Innovation ............................... .. 1
M
Intangibility ........................ ..
emen counti ; ........... ..36
Interest Cover ....................... ..
rgin ............................... ..lOO

Internal Rate of R
‘ 0' ng ...................... ..108
Interpolatio
, .................................... ..100
Mster Budgets ........................ ..123
Material Cost Variance ............. ..136
Material Requisition Note (MRN).98
Maximum Inventory Level ........ ..100
Minimum Guaranteed Pay ....... ..103
Minimum Inventory Level ........ ..100
Mission Statement ................... ..140
Motivation ............................... ..147
Key Performance Indicators (KPI) Moving Averages ...................... ..120

............................................. .. 142
Multiplicative Model ................ ..120
Buy Full AEEA FZ/FMA Study Text Bunk (4S|]:) at ALIEASLIPPURTIIIJM | SHARE | EUMMENT | Fl]RLlMS | JUBS
AREA F5, FEI, Pl, P3 Study Materials Free [Iemu Duwnluad 5 ABBA Distance Learning Tuitiun [lnurses
n
Multistage Sampling .................. .. 56 P
N Payback Period ......................... ..128
Net Present Value (NPV) .......... .. 127 Periodic Inventor

Non Controllable Cash Flows 127 I '- ------ -
Non Financial Performance -------- -

Measures .............................. .. 142
Non Linear Relationship ............. .. 76
Non-production costs ................ ..
Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ------
Operating Profi ........................... ..49
ined Overhead
ption Rate ............ .. 105, 106
Prlme Cost ................................ ..112

...... H Principle Budget Factor..............123
Probability .................................. ..52
Process Costing ........................ ..112
Production Budget ................... ..123
Production costs ........................ ..60
Production or Factory Overheads

Budget _____________________ __123 (F.O.H) .................................... ..64
Overtime Premiums ................. .. 103 Production Volume Rati0104, 143
Ownership _______________________________ __147 Profit Centres ............................. ..79
Buy Full AEEA FZ/FMA Study Text Bunk (4S|]:) at AELIASLIPPURTIIIJM | SHARE | EUMMENT | FURLIMS | JUBS
AREA F5, FEI, Pl, P3 Study Materials Free [Iemu Duwnlnad S ABBA Distance Learning Tuitinn [luurses
n
Purchase Invoice (PI) or Supplier Resource Utilization ................. ..147

Invoice .................................... .. 98
Responsibility Accounting .. 129, 130
Purchase Order (PO) .................. .. 98
Responsibility Centres ................ ..78
Purchase Requisition Note (PRN).98
Purchase Return Notes or Debit

Note ....................................... .. 98
Q
Quality ..................................... ..147
Quick Ratio ............................ ..
Quota Sampling ............ ..
R
Random Sa
....................................... ..103
..... .. Sales Budget..............................123
.... .. Sales Invoice.................................98
Sales Return Notes or Credit Note.

................................................ ..98
Sales Value Method ................. ..112
Sales Variance .......................... ..136
Sample ....................................... ..49
Sample Size ................................ ..50
Re-Order Quantity ................... .- 100 Scatter Graph ............................. ..92
Residual Income (RI) ................ .. 143 Scenario Planning ..................... ..123
Buy Full AEEA FZ/FMA Study Text Bunk (4B|]:) at AEEASLIPPURTIIIJM | SHARE | [IUMMENT | Fl]Rl.lMS | JUBS
AREA F5, FEI, Pl, P3 Study Materials Free [Iemu Download 5 ABBA Distance Learning Tuitiun [luurses
n
THIS STUDY MATERIAL IS NOT AVAILABLE OFFLINE IN ANY FORM (DVDs, CD8, PRINTED BOOKS)
Seasonal Variations .................. ..120 Stratified Sampling ..................... ..53
Selling & Distribution Overheads . 61 Sunk Cost ................................. ..127
Semi-Variable Costs ................... .. 72 Systematic Sampling .................. ..53
Share Options .......................... .. 132
Simple Aggregate Index Numbers

............................................. .. 121
Simple Interest ......................... ..127
Simultaneity ............................. .. 143
Spread Sheet .......................... ..
Spurious Relationship
Standard Costing ...................... ..
Standard Devi
Total Cost ................................... ..73
Total Quality Management (TQM)

.............................................. ..116
Trade Payable Turnover ........... .. 142
Trade Receivable Turnover ....... ..142
Trend ........................................ ..120
Strateg' Objectives ................. .. 140 U
Strategic Planning ...................... .. 4O Unavoldable Cash Flows """""" "127
Strategies ................................... .. 39 Unavoldable Idle Time Cost """ "103
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at AEDASLIPPDRLDDM | SHARE | DDMMENT | FDRLlMS | JDBS
ADEA F5, F5, Pl, P3 Study Materials Free Demu Duwnluad 5 ABBA Distance Learning Tuitiun [luurses
n
Under & Over Absorption ........ .. 106 Variable Costs per Unit ............... ..68
Unit Costs .................................. .. 78 Variable Production Overhead

Variance ................................ ..136
Use Value ................................. .. 145
User-targeted. ........................... .. 41
Value Analysis .......................... ..145
Value for Money ...................... .. 143
Variable Cash Flows ................ ..
Buy Full ADDA FZ/FMA Study Text Bunk (ASfli) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLlMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demo Download Ei ADDA Distance Learning Tuitiun Dnurses
n
THIS STUDY l\/IATERIAL IS NOT AVAILABLE OFFLINE IN ANY FORM (DVDs, CDs, PRINTED BOOKS)
INTENDED BENEFITS OF THE E-BOOK

‘Features & Benefits of ACCA Study Text Ebook
1) Exam Focused: Exam focused ACCA study text ebooks are
aimed to help you passing exams by allowing you
spend efforts and time artly.
ACCA study text books aimtdeducati you in»

way you are exp cted to apply you wledge
‘\
are updated prior to ach

exam sessipn a during twxam session 1n the
light of recent infor tion a ai ble yrch as
examiner published an rticle in s dent
accountant. In that case: y(?/ill receive
updated version of relev nt ACCA study text
bdok via e—mail.
Us ally ACC students look for w exam

tips amie end of exam session to learn important
syllabugareas much better. Therefore, those
ACCA students usually do exam focused study
‘inly 2 weeks or 1 month before. ACCA students
can greatly improve the probability of passing
exams if they do exam focused study from the
beginning.
Exam Focused ACCA Study Text Books

bring all relevant information under one roof to
eliminate information gathering on relevant ACCA
Buy Full AEEA FZ/FMA Study Text Bunk (4B|]:) at ADDASUPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demo Download 5 ABBA Distance Learning Tuitinn [luurses
n
exam paper and prevents the chances of omission

of important information about the relevant ACCA
exam paper.
These study materials take account if examiners

comments and reports, pa am papeifi, student
Y . . \ .
accountancy Ifidles, publlcatlons in u
magazines to. \ 3
\
2) Examiner's Exam’ er's Guidance are exam preparation

Guidance:
tiP s givenb
x y tY‘examine‘in student
accountant, examiner's" ervie nd other
7
documents. \ \
3) Author's Author's‘guidance are applica e to all
Guidanc
syllabus areas.
It also includes tips‘ t enable you to prepare for

exams and perfdrm during exams effectively .
\Exam Awareness shows the frequency and
magnitude (marks) of each syllabus area.
It amiows the relationship between various

'llabus areas and how each syllabus area
contributes toward passing exams.
Exam Support provides guidance on application
of knowledge in exam context.
Just knowledge is not enough for passing exams

rather you have to use it wisely in limited time
available in the exams.
Buy Full AEDA FZ/FMA Study Text Bunk (48|]i) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials Free Demo Download Ei ADDA Distance Learning Tuitiun [luurses
n
6) Past Paper Past paper analysis is given at the beginning of

Analysis (F5, F9, the study text and also directly below relevant
P1, P3): headings.
Past paper analysis at the beginning of the study

text enables you to practiceqiast exa estions
relevant to each syllayis area on CCA glob l
website. Therefore, you do not ne to buy
expensive prafictice kit or search for r
questions prac 'ce a particular syllabus area.
Past paper an sis directly belo each relevant

heading gives an ea aboL the length,
co plexity of reqi ents and VE S (Explain,
Evaluam, Report e c) in which @8181 syllabus area
can be examined.
Learning objective sets th knowledge and
skills exp ted to be achieved after reading
particular sy bus’rea.
F2 Management Accounting exam format
does mprfide significant benefit from past
paper alysis. In CBE (computer based
exams) each candidate may be examined
different set of questions.
However, importance of each exam topic is

discussed under exam awareness and exam
support headings.
Illustrations are simple numerical examples
given to prepare students for more challenging
exam standard questions.
Illustrations depend on the type ofACCA
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at AEDASUPPDRTDDM | SHARE | L'DMMENT ] FDRllMS | JDBS
ADEA F5, F5, Pl, P3 Study Materials Free Demo Download Ei ADDA Distance Learning Tuitiun [luurses
n
paper. Discussion based ACCA papers may not

include illustrations.
9) Explanations (if Explanations are given to explain the rationale
any): (why & how) behind steps involv in calculations.
Explanations depend on i ra ions provided in

the study text book.
10) Examples: Examples are givgn to explain technical
theoretical knowledge‘ih simple and
understandable way.
Tecbféj arg ns are used to prepare you for

\ .
different technic erms usewy theyxmner to
dodge you to ensu t you unders 0d the text
rather‘otTlan rote learn the tex
\
These technicaljargons ar explained in
parenthesis r ab‘Separate example to make you
\ i
understand tl technical term and syllabus area

as whole.
It also yows the application of knowledge

into practice.
ltis especially useful when you are expected to

apply your knowledge to answer scenario based
questions.
Processing information meaningfully and logically

leads to better retention of information. Linking
new information to information already
committed to your memory, such as every day
Buy Full ADDA FZ/FMA Study Text Bunk (48l1i) at ADDASUPPDRTDDM I SHARE | [IDMMENT | FDRLlMS | JDBS
n
experiences, is proven technique for learning new

knowledge.
It will also motivate you to learn harder, as you

A
will understand the benefits 0 technical
knowledge in your care s chartered
accountant.
11) Diagrams: Diagrams are givdn to explain complex

\\
concepts and procedures, whic arehfficult
to undewd in words.
\
DiagramQlso dto bett mem rization of

knowledge.
\ ' I
Diagramslead to thg use of righ rain while

xt lead to‘he use of leftyain. Combination of
text and diagrams enable you to learn ACCA
ape-rs-using both brains to avoid getting
overstressed left part of the brain due to excessive
reading.
Leftbrain is responsible for reading, calculation,

analysis. Right brain is responsible for
[establishing relationships, reading graphs &
charts and dealing with non—financial aspects,
such as motivation of managers and employees.
Practice questions are exam standard
questions to provide a clue about length
complexity and format of questions likely to be
asked in the exams.
Buy Full AEEA FZ/FMA Study Text Bunk (4B|]:) at ADDASLIPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demo Download 5 ABBA Distance Learning Tuitinn [luurses
n
Solutions are given in a format that will save

time, while solving questions during the exams.
Time management is important during exam,

ability to solve question but takirig lyre than time
available is of no use. You st be able t2 solve
question within giveIBime. Ther ore, you ust
identify, which ste s will be reg 93 I“:
steps can be ositted without losing ma
\
In addition, you sol tion should be properly cr -

referenced su
X
as working 1, 2,\$Ketc and la ed
xt rath han ab reviations.

’7 . I
Solutl n is supported with explanations to tell you
why and‘liow that particular is performed.
H erlinks are links to 0 er areas of study text
bo k. In additio 1 exam topics are linked
Ito ‘ . m m‘ics a table of sub exam topics are
link I e m topics given at the beginning
of eac exam topic.
Hyperlinks will save several minutes per day,

which flu may spend navigating through ordinary
printed and ebooks. Hyperlinks will save large
amount of time during the whole exam session.
,Bookmarks are given for reaching quickly to
relevant syllabus area. It is an alternative to
hyperlinks.
Table of key terms shows important terms
across the study text book that you must
understand in order to learn relevant topic and
pass the exams.
n
It allows you to reach to the place inside study text

book, where you can develop basic
understanding about particular term.
16) Colours: Colours are used for demarcatio between

essential text, supporting exam support
etc.
\
It will enable yo 0 nd required ebook featu
such as exampleI exam support, diagram ac
easily/ '
filso make lekuing interesting. Writin golden

ords without motivating reader to r it is of
little \
You can highlight tex and a omment
anywhere in‘he study xt
Highlightin wimnabl you to highlight

hrases and entfi'ces you want to read again.
Commenting will allow you to make a brief note

in the study text book. You can use commenting
. to:
/- Save mnemonics.
. Mark as read important, unread, read,
Revised etc.
However, most publishers do not allow these

features to enforce their copyrights.
18) Readout Loud: Readout load enables students to listen written
text. You can use any screen reader of your choice
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at AIIDASUPPDRTDDM | SHARE | DDMMENT | FDRUMS | JDBS
n
to convert text to speech.
Those who have problem reading text can

particularly benefit from this feature.
A
Others can have a break from reading text.
Listening involves the 96 Right brain‘opposed
reading, which involves the use of\Left brain.
Listening allows fiur Left brain to re ize fo
future reading. \
It will afso help rekon of yoilr syllabus before

exams much fawn It is u ally believed that
listening is many times faster proceslvhan
reading. You can adj us\he speed according to
NM preference. V
Each point oft‘heory is started from separate line

interest.
to enable yU\_’
to listen gnly the text of your
’ These study te t books have legible fonts type

\& size and high contrast colours to enable you
rea?ly without producing strain on your eyes.
YOL do not need to zoom and then scroll

,horizontally (III? to read study text.
You can switch to two pages per screen layout to

avoid frequent vertical scrolling, without
compromising readability to significant extent.
Study planner is a method allows you to plan for
study within limited time available.
It also allows you to track your progress

against plan; therefore, you can adjust your speed
Buy Full ADDA FZ/FMA Study Text Bunk (48l1i) at ADDASUPPDRTDDM I SHARE | [IDMMENT | FDRLlMS | JDBS
n
of study and study hours accordingly.
Time management is specially important for

professional students that you have to meet other
A
commitment such as job, frie ds and family.
21) Printer Friendly: ACCA study text books ar conomic‘to print.
Diagrams, tables aid other formatxgg are made

to keep the cost P rinting to minimum.
A \
You may nsider printing two pages side by si
to sav apers am, Withoutcompromisi
readabilitykto Sl ificant ewt.
fios other publishe 0 not allow péting an

ebook it all or just adlow to p 'nted 25% — 60% of
the ebook p‘ages. accasupp .com allows 100%
printing of the aook pages.
_It will alsoprovidértability as you can easily

carry it in our bags.
mF (PoFiaEle document format) files can be
viewed‘using free adobe reader.
fibe reader is compatible with most operating

systems such as windows, Mac, Android etc.
You can also read ACCA study text ebook on

tablets and cell phones supporting PDF format
to take these ebooks on the way or at
workplace in your pocket.
Therefore, you also do not need to buy pocket
Buy Full AEEA FZ/FMA Study Text Bunk (48|]i) at ADDASUPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demo Download E'r ADDA Distance Learning Tuitinn [luurses
n
HOTBS TOO.
It can be used on multiple computers and mobile

device without any limitation imposed on the
number of devices.
PDF file format is widely used file forma used to

compress file size 0} electronic doc ents su as
ebooks and take ery little timeikolload as
compare to 5 having EXE fi1e format.’
ACCA study text ebo is searchable through any

software havin 'nd and twce function.
However, conversi'o PDF into D C, TXT etc

formatlrfiay distort structure 0 ebook or make
iRunreadalk at all.
Reading Ebooks‘ on digit media such as PC,

laptop, tablets, cell phones are among the best
\ T ways
from to save papeland
greenhouse effect. therefore, environment
MillMers can save thousands of trees

eacl? .
It al 0 prevents CO2 emission in traveling or

delivery of printed books in addition to traveling
/or delivery cost and time.
In addition, it is our moral duty to care for

environment and society who lives in that
environment.
You can benefit from studying immediately
after download. Step—by—step guidance is given for
downloading ebook for first time buyers.
One step secured order form without any
Buy Full AEDA FZ/FMA Study Text Bunk (48|]i) at AEDASUPPDRTDDM I SHARE | [IDMMENT | FDRLIMS | JDBS
n
registration. All major credit cards & paypal

accepted.
No installation required of custom software design

to enforce copyrights. Custom software may not
work well with different P , apmpflbile
devices etc, as it is virtualllimposwfle to test
custom software against different harke and
software speci icationstx,
us sof‘t‘w\ares prlvent unpopular

softwares fronfiunning on the system. Ther ore,
you may need to disable an ' virus p3or to
executing the appli 'on.
PDF filaignat is widely use e format for

sharing documents online (1 offline. Therefore,
it is very unlQ<e to have issues with PDF file. There
4*
are numerous free’iDF readers available to suit
your needs.
No licen§ing and online registration requirements.
\ No waiting time for receiving password or ebook

itself.
Please! Note that ebook cannot be refunded due to

instant download and no DRM (Digital Rights
Management) protection software imposed, as
others.
25)G ranteed You will be granted 100% free study text ebook
Pass: for subsequent exam session until you pass your
exams.
(nothing to lose)
Unfortunately, if an ACCA student does not
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at AIIDASUPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
n
make a pass, then he/she has to send an e—mail

along with ACCA result screen shot/PDF file
and customer order number or transaction
identification number.
26)Harmony Most publishers do not involved writing and
editing their books. They hire[writers having
expert knowledge on particular topic. owever,
they are not connected ' ACCA t ' g
provision and therefor not awam of practical
challenges, jargons etc face:_dxby students dur
the exams and anf of weaknesw the part 0
students. \
It cryack ofharmoimetween different

syllabu ea's. Each syllabus seems to be
unre ed to each other while st dying. How er,
myt examinerxrequire stflients to demonstrate
the understanding of overlapping nat‘ure of the
Isyllabus. This wou ot be a case, ifflire
syllabus of relevant eb k was written by one
any pub shers using‘their

marketing tool for other h' ly profitable activities
such as tuition providin recruitment agency,
paidadvertisiflng etc. book publishing is not their
core competency. ey tend to direct their
resources towards more profitable activities, while
quality of ebooks may suffer as a result.
'
accasupportcom is devoted full time to ebook
publishing and continuously acquire new skills
(merfiory techniques, for example) and resources
0rd processing software, for example) to
compile an ebook to support students in much
better way.
Access You will have direct access to author &
administrator, without having to wait for
information to be transfer to and from more than
one desk to reach the person responsible for
making decision. It will result in quicker response
to inquiries. In addition, you need to send only
single email to resolve your all issues rather than
dealing with different personnel for each issue,
regarding purchasing and usage of ebooks.
Buy Full ADDA FZ/FMA Study Text Bunk (48l1i) at ADDASUPPDRTDDM | SHARE | [IDMMENT | FDRLlMS | JDBS
n
29)No Hidden Many publishers provide money back guarantees

Policies and gifts etc. However, it is subject to hidden
charges and conditions, which are not
communicated on sales page and ebook
description page. Instead, such policies are
communicated on FAQs, Term ervice,
Delivery etc pages.
Refund policy is communic ’[

home page and instant dow%
I
Buy Full AREA FZ/FMA Study Text Bunk (ABUi) at ADEASLIPPDRTIIDM | SHARE | [IDMMENT | FDRLIMS | JDBS
fl
AUTHOR'S PROFILE
Name: Murtaza Lanewala
Career Status:
Freelance writer & tutor for

professional accountancy
qualifications. Professional bodies
include ACCA, CIMA and ICAEW.
Author & CEO of accasupportcom
E-mail:
kabuli l;2@hotmail.com o
murtaza@accasupport.c
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at ADEASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials Free Demo Download Ei AEDA Distance Learning Tuitinn Duurses
B
IMPORTANT!
1 Disclaimer
This study material is sold only through accasupport.co website.
However, Clickbankcom is the credit card processin rganization for
collecting payments for this study material. This s ateri l is not
available offline (shops, schools etc.) in an orm such VDs,
CDs, Printed books etc. Study materials purchase from‘nauthori (1
source can be out of date and incomplete. n additio you will not b
able to receive free updates given to t terial.
Demo version of this material is availabl free of‘cost, pleasctake care,

not to pay for demo version of th' GDOORMIQULIIOI‘IZOO. sellers.
This material is for ACCAe minatio une 201 only. Students who
are reading out—dated In rial are\at r1 as it wi not be representative
of current examinationzrgiittermi ol gle and 1 bus. ’
Readers of this material will be olely responsib e fo the ‘consequences

of any decisions made i real life. Author 82“ accasup .com are not
responsible the readegqf this material under a circumstances.
Recommen io ns ('1e 0 any kind arantelligent guesses to the best of

autlyr’s kn e‘ “ \ ‘
\ 7'
Names ofiqdividuals“organizations, countries, religions etc are used for

educatiQnal purpose only. It‘fs not intended to abuse, discriminate and
heart anyope's feelings an‘ digrTlly
1ght Notlc
This material is subject opyright protection law. Infringement of
copyrighw results i riminal liability (fine or imprisonment or both).
Copyrig infringement is effectively theft of intellectual property;

therefore, 's ethical from social viewpoint and sinful act from
religious viewpoint as well.
Copyr'i ©2012 Murtaza Lanewala. All rights reserved.
2.1 Do
You can make a backup copy of this material.
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at ADDASLIPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
n
You can use parts of this material provided you quote the appropriate
reference to the author and material.
2.2 Do Not
You cannot publicly share this material in the form of hard copy or soft
copy (physically and over the internet) for cash or for ee.
You cannot transform this material into other me s o coNication

such as photocopy, video, audio etc. Unless ne '
purpose or personal use.
You cannot change the file format of thi material or make i 'table.
You cannot resell this material unless you are selling the orig' al copy
purchased. I ' \
You cannot use any part of this materi 'n or wit conten s associated
with violence, politics, jeligious and por ' tents in any way.
BE AN AFFILIATE
BE A PARTNE
Buy Full ADDA FZ/FMA Study Text Bunk (48l1i) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLlMS | JDBS
n
USER GUIDE
E book features i Etails
Learning objective sets theytive of learning
Learning Objective
iparticular exam topic. _
Sub Exam Topics It provides list of mairwingsil‘ttkhe
beginning of each exa topic. You veto just
click relevant heading in a lisxreach there.
Exam Topic It provides brag information compos‘qn
Awareness (theoretical v 1putational) and iwrtance
I of each paper in exam context.
Exam Support l Exam Support ,provides detailed informatio
onaye-tion of theory and calcula'wns in
ex context. '\ ‘
Example Exam le prbyides pra ical application of
technical theoretical kn Iledge. .
Illustration ’ Illustration provides numerical awlications of
theoretical knowle .
Explanation Explanations provide the rea ons for
correctness or un correct ss of particular
statements and calcu%
ormula is mathema cal equations and
tabular f ats, ,
Diagrams are vital (Graph, Charts, Tree
formats etc) ‘presentations of theoretical
knowledge.
Cross-referencing are hyperlinks to other
Wopics. Click previous view button
to go back.
Highlighting is used show the relationship or
cormection between words and figures.
Click bookmark icon in the side bar (see
below) to jump to specific exam topic in the
ebook.
Buy Full AREA FZ/FMA Study Text Bunk (48|]i) at ADDASLIPPDRTDDM | SHARE | DDMMENT | FDRLIMS | JDBS
fl
~1Mue-l-er Ellill'l l'l‘ llr-ainlgeilluni uI_'I.'r.IuI|IIl||_!.'_.luJl - l'ulube l'lL'd'E'L'I - I
MLeee-te
EIEEZII s i! e '§=lEl1'“-°3@a:l” 'i'aee.;..lti Elli—Ilia’ ‘ im'slsl-P‘l‘mm‘
. .4!
DescnlJ-e the Impact cl! general economic environment an ccrs'tslreuenue.
r‘ Ecenurnic environment decides the demand for goods or ale-wires. Business-cycle such as
recession or growth can influence what and! how much organization produce.
' Economic environment decides the price fcn' goods or services. If economy is pnnsperlng
hiaher nrlclnl can be chareed l-D customer than ll'ccmtractlni.
If you not currently using adobe reader, then I refommend yoibto

download adobe reader; to get maximum benefits from t 's ebook.
http: / /get.adobe.com /reader/ to downloa
n
INTRODUCTION TO F2 MANAGEMENT
ACCOUNTING
1 Examiner ‘
The F2 examiner is David Forster. \
2 Aim
To develop the knowledge and understand'ng of providing basic ‘
management information in an organizafldn to supportmanagement in
planning and decision—making.
3 Position of F2 Performancyi®ggent in I
I
P3 P5 ACCA
+ 1‘
L _____ __ F5
FIA FMA F2
1‘
MAE
‘i
MAl
n
4 Main Capabilities & Relationships

RELATIONAL DIAGRAM ‘OF IMAIN ‘CAPABILITIES
The nature, source and purpose of management information IA]
I
Budgeting 4—_
I
(C) —il*
l I Cost aoeou nting

techniques
Standard costing (IE)
(01 —*
.1—
I I
Performance I
measurement —-I»
(E)
5 &am PapeM
he examination will nsis of 50 two mark questions.
http: / /www.accaglobal.com/ en/ student/ Essentials /pass—exams.html
http: //updates.accasupport.com
Buy Full ADDA FZ/FMA Study Text Bunk (liSfli) at ADDASUPPDRTDDM | SHARE | [IDMMENT | FDRLlMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad 5 ABBA Distance Learning Tuitiun Dnurses
n
http : / /accasupport.com /blo gs .htm
n
EXAMINER'S GUIDANCE
Examiner’s Name
Steve Jay
F2 problems are highlighted by the e
9 Lack of knowledge.
9 Careless reading.
9 Lack f understanding.
9 Narrative questions generally.
9 Failure to practice questions.
Examiner’s reconfln ~
9 Cover the full SMS.

9 Understanding.
9 MCQ techqluw
9 Oflective testing question practise.
A
0 lack of knowledge
9 A ormal losses.
9 Co sifications.
9 Fixed overhead variances.
9 Standard cost operating statements.
Poor erformed areas due to careless reading:
9 Rel vant costing (relevant costing is now only examinable in the

context of capital budgeting).
n
Poorly performed areas due to lack ofunderstanding:
9 Under or over absorption of overhead.

9 The apportionment ofjoint costs.
9 Constructing spreadsheet formula (no longer in study guide).
9 Calculation of allowances for idle time (no lon n study guide).
5
Syllabus areas specifically refemwl"
Performance measurement \ ’
9 Relationship b/w mission, objectives and performance measurement.
9 The effect of market conditio d government Eegulation on ‘
performance measureme . i
9 Calculating and inteapreting financial ratios. ‘

9 Selecting performance iridicators. ’
9 Calculation ofret-uqon investment on r sidual incoke.
9 Differenc etween cost control‘a'nd cost re uc ' n.
9 The a plicatiormf value analysis.
9 Financial indicator
9 Service‘ndustry, \
\ .. . .
Not @I'Oflit organlzqtion ,
9 Manage ial performance.‘ /

9 The problem of “short termism” and benchmarking.
'lSllTl &Budgegzg
9 StatisQal techniques of correlation.
9‘)rdinary le squares regression.
9 Time series techniques and calculating moving averages, trend and
seavnal variations (additive and multiplicative).
9 Product life cycle costing and its effects on forecasting.
9 Index numbers both single and multiple (multiple index numbers is
not mentioned in study guide).
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at AE'DASLIPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
n
Capital Budgeting
9 Administrative procedures for constructing a capital budget.
9 Compounding and discounting.
9 NPV, IRR and simple and discounted payback period.
9 Distinguish between capital and revenue expendi re.
9 Relevant and irrelevant cost /
9 Annuities and perpetuities.
9 Behavioural aspects of budgeting focusingon motiv tio and
participation.
Sources of data
9 Sampling methods.
9 Tables, charts and gr
Alternative costing techniq

9 ABC costing.
n
MURTAZA'S GUIDANCE
Please! Buy Full Version.
n
STUDY PLANNER
Determine number ofdays available
Formula:
* Number of days available = Number 0f days before exam — 16 time
Idle time can be incurred due to sickness, co puter cra social eviits
etc. It depends on your daily activities and)nvironmfit.
I recommend you to make a printed c y to read when c

available.
Allocation ofnumber o
Formula:
w umber of pages
Num er of pagesper exam

ays allocated
Numbgr of pages will include allow ce f0 solving past paper questions,

stu accountant articles
, etc.
.
‘
Please potaiat different syllabus areas will take different amount of
time. Calculations will take mdi'etifl'le than theoretical areas. Therefore,
it “genes/011 only rough ideaat your progress.
Remaining total number of pages

no of pages per day =
Number of days available
If revised number of page per day is > than originally plan; it means you
are lagging behind and now you have to do study more per day.
Troubleshooting
Study at time of day when you are fresh. This will enable you to learn
more in available time.
Buy Full ABBA F2/FMA Study Text Buck (48|]i) at ADDASUPPDRTDDM | SHARE | DDMMENT | FDRLIMS | JDBS
ADDA F5, F9, Pl, P3 Study Materials Free Demo Download 8 ABBA Distance Learning Tuitiun [luurses
m
Consider skip reading examples, if you understood theory by reading

main text.
Study in the end sub exam topics, which is less likely to be examined in
your exam session. You can see past paper analysis given below each sub
exam topic. i
Buy Full ABBA F2/FMA Study Text Bunk (ll-Sui) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRUMS | JDBS
ADDA F5, F9, Pl. P3 Study Materials Free Demo Download Ei ADDA Distance Learning Tuitiun [luurses
m
FORMULA SHEET
Regression analysis
y = a -z bx
rybzx
a:
H—H
b: nzw-zxzy
H211 *(2 I):
* HEW—21:21»
‘Iii-12,12 — (Zn: MHZ y1 — (‘Z W '1
Economic order quantity
Ecnnomic batch quantity
I 26GB I
_ I D
C Il — —I
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at AL'EASUPPURTIIIJM | SHARE | EUMMENT | FURIJMS | JOBS
AREA F5, FEI, PI, P3 Study Materials Free [Iemu [luwnlnad 5 ABBA Distance Learning Tuitiun Euurses
B
Exam Topic 1: ACCOUNTING FOR MANAGEMENT
Exam Topic 1:
ACCOUNTING FOR MANAGEMENT

Sub Exam Topics
S.no Headings (click the cross—ref below for easy r . Pg.no
1 Purpose & Role of Management Accounting
O \TO\U1-I>OQIO Financial Accounting Vs Cost & Manage
Planning, Decision Making & Control
Types of Planning
Difference between Data & Infor
Attributes of Good Informatio
Exam Topic Awareness

Analysis atails
Composition ACCOUIII’EIéIg for managemen is examined as text based
questio . * i‘
\ i i V
Importance Accounting foxnanageme t prbvides the r ason for

studying other exam topics. t will enable to you make
reasonablgxguess if you are no svout the answer of a
particular question.
n
1 Purpose & Role of Management Accounting
Learning Objective:
Describe the purpose and role ofcost and management accounting
within an organization.
1.1 Purpose of Management Accounting

Cost and management accounting is about providing necess
financial and non-financial information to manage nt and
employees at all levels inside the organization for decisio makin
purpose, so that they can better be able tg'make rational decisions in
timely manner. \
Example:
Reporting information on a c.
/vl Strategic I
Managemen
‘ Accountant
Tactical Management I
\ acro environment
v Operational
Management
1.2 R e ofManagement Accounting

Cost and management accounting can have different types of roles in
different organizations.
Buy Full AL'DA FZ/FMA Study Text Bunk (48Di) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
B
Following are the roles, which are commonly performed by the cost and
management accounting function or management accountant.
Roles ' Details

Setting product Management accountant works out the product cost
costs & selling using suitable costing techniques suchasabsorption
price and marginal costing methods (s e later). They
calculate selling prices based (i-iark—HpfPrqfit % on
cost) set by the senior managenLent.
Budgeting and Management accountant repares budks based
forecasting ) present and future obje/i/es and strategies of the
organization. For th's purpose\, they forecast xtimate)
many variables such as sales volume and cost c ranges.
Communicating Management a untant athersldata and information
& Reporting from interna nd externaaources. They compile is
informatipn iqan a ropriatef
report 't to approprije\evel of rmatfstructure a (1
nagement (strategic,
tacti or operational) in an organization timely

manner. II i \
Assisting in Managemenficcountant provides ma cial and non—
decision 41nan‘cial information, which can 'st managers to
making make informed decisions. They e techniques such as
/ Linear programming (not in sy labus) and marginal
costing method (s eilater) etc.
Perf‘prmance \Managem‘e'iitaccou tan ‘ stablishes performance
management & measures (such as C , RI etc) against which
control \ performance of indi 'duals & organization as a whole
\ \ can be evaluated. Ke/she gathers information and
\ \comparesg'Lt a inst standard so that performance can
| be rewarded r penalized.
cial Accoun V's Cost & Management Accounting
ina v ial Accounting Management Accounting

Financwccounting is required Management accounting is not
by law, such as company law. required by law.
Non—compliance can result in
penalties and punishments.
n
Financial accounting is for Management accounting is for

providing information to external providing information to internal
parties such as shareholders parties such as Board of directors,
government and bankers etc. managers and employees.
Financial accounting uses Management accounting adopts
international and local flexible approachtb internal
standards to and
frameworks prepare standardized
accounting of details an)cqlliannel
reporting. of ‘ level
For at, structure,
financial statements. communicat'on deQd on situation

to situation. _
Financial accounting mostly Malflgement accounting rovides
provides financial information both financial and non—fi cial
along with minimum non— information‘? Usually explanation
financial disclosure required by , and interpretation of tech ical
accounting standards in notes financiakfigures.
the financial statements. . A
Financial accounting information \ Management counting is resent
is historical and do nowrovides and forward looking. It’ssists
information on future prospects of management in efficie t and
an organization. effective operation of an
" \ ‘organization.
Financial ac inting provides Ylanagemengc/ounting provides
informatioQ performance and I information or decision-making
positio of an organization at ,Qpurpose Whenever needed, so that
reg intervals usually 1 orga " ational objectives can be
achieved.
ontrol Process
’ sses ofplanning, decision—making and
Planning Decision Making Control

A
Feedback
n
3.1 Planning
Planning is about looking into the future.
It involves asking following questions.
9 Where we are?
9 Where we want to be?

9 How do we get there?
-) How external factors will influence thyrganizatifiMTEL \
factors) ‘
9 What skills and resources will be needed? (SWOT analysis)
_-__
After conslderlng all above qu stions t minimum, Organizational

Objectives are set and strategies are de ' ed to ac 'eve those objectives
as part of planning process. P
' I
Everything considered during the planning pr ess should be recorded
and updated eac ' plan is revised.
Objective arexlong
relevant and term SMART
ti“ \ e bounded) t ets(specific, measureable,
t bylThe attainable,
'brganization.
its cus mer then objective ofcost reduction will not leadfulfilment of
mission. Rather organization should set the objective oflowering no of
complaints.
Buy Full AL'DA FZ/FMA Study Text Bunk (48Di) at ADDASLIPPDRTDDM | SHARE | DDMMENT | FDRLIMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnlnad S ADDA Distance Learning Tuitiun Duurses
u
3.1.2 Strategies
Strategies are short-term plans made to achieve organizational
objectives.
Examples:
Making new products and selling them into existing
Sell existing products into new market.
Provide luxurious environment to golfclub
Strategies made by the organization sho d b consistent wit l\ssio

objectives.
Example:
Iforganization set the objec '
internal savings (retaine
objective. Rather orga '
support the objective of ver
3.2 Decision '*

Management at all levels needs to t decisions to fil objectives.
Decisions gfade‘by the managers mus be consiste t with the
organizational mission, objectives and strategies.
All cision made by the managers should'b’e recorded so that they can
é’made a‘dcountable for‘t‘heir decisions.
3.3 01 \‘d To’
Colqrol is ercis ‘to evalu the results of decision—making.

Whether the decisioils made a e correct or different course of action
should bgken.
Actual resul s should béompared with plan and variance (divergence)

from plarkneeds to be investigated to determine causes.
Any informatioh obtained during the control process is feedback into

the planning'process so that realistic plans can be made next time and
inform? decision can be taken.
B
4 Types of Planning
Learning Objective:
Explain the difference between strategic, tactical and operational
planning (K). I
l Strategic Planning Tactical Planning ‘MW

Long term Planning. Medium term flhort term nning.
i planning. A ‘i
Brief planning.
Largely planning Moderate plannin
Break up of .
straiéggic Detailed planfigli
Planning based on’
based on external plans into pl s internal histofigal data

covered by the
information.
Issues
environmental imple
Deci
capable g,
oftation.
how
imucf \ \ Issui
(past expefinces).
covered
» b?
strategic planning units w uld operatl nal planning

would be product manufac ured each uld belihow
development and )Tihduct? Wlmt in of frequent machine
marketing strategy. pricing techniq e to mainte ance should
DGTCEIMIPGCI out?
5 Differe v etween ata & In \
Information
a is the collectio'n of raw fac Information is the meaningful
an figures \ \ 1 compilation of data.
Data \ 0 not support ecision— Information supports decision—
akiiig. _ making.
Staterne f comprehe 1ve Reports to the management on
incomgand statement of financial organizational performance are an
position are examples of data. example of information.
. of Good Information
Objective:
Identi and explain the attributes ofgood information.
Attributes Details
ADEA F5, F5, Pl, P3 Study Materials Free Demu Duwnlnad S AIIDA Distance Learning Tuitiun [luurses
fl
Accurate Information should be free from any arithmetical or

grammatical mistakes.
Complete Information should not be less than 100%.
Cost— Benefits of obtaining information must exceed its costs.
beneficial A i
User—targeted ‘ Information should be targeted to a ropriate person i.e.
who have the ability to make decifi based
information. I onsuch
A
Relevant Information should be relevant to the ma er under
Ignsideration.
Authoritative Information should be f m t stworthy sou
anyone has to believefi be true.
Timely Information sho be communicat in time. Exampl
news would no e of anmf comm nicatedl e.
Easy to use Users of the informati ~ must ab .- to understand nd
1 apply it or decision—ma ~: purpo .
7 ‘ A
Limitations of management informat n faecision—making purpose

ar iven‘below. 7":
ofa rtis
Manag ay n have enrglgaymowledge and experience to
unmstand technic l jargons d methodologies used for preparing
eports.
mime I
Managers may not have enough time to read every report thoroughly
present to them or management accountant may not able to supply
informati‘orli‘ ' ’in time.
7.3 La understanding
s may not understand the importance and role management
accounting information for decision—making purpose. They may consider
provision of such information useless or reduction of their autonomy to
making decisions.
Buy Full AL'DA FZ/FMA Study Text Bunk (ASfli) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLlMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Download 5 ABBA Distance Learning Tuitiun Dnurses
B
7.4 Lack of Relevant & Reliable Information

Sufficient (relevant) and appropriate (reliable) information may be not
available to management accountant to analyze and report information
based on them.
8 Practice Questions & Solutions

8.1 Question (12/06, Q2)
The following assertions relate to financial acco mg and to cwt
accounting:
(i) The main users of financial accounting information are external ban
organisation. \ \
(ii) Cost accounting is that part of financial accoungng, which records

the cash received and paymewade by a ganisation.
Which of the following statementskare t e?
A. Assertions (i) and (ii).are both corr

B. Only assertion (i) is correct.
C. Only asse ' " is correct.
Solution:
T
stae mai objective
merl§ of financial
is to provide a unting
information informationon(financial
to shareholders the
ance of the company hose are external to the organization.

it is also useful f other stakeholders (interested parties) such
uppliers, t authorities, customers etc. Management and
other employees of the company needs detailed information those are
internal to the company. Detailed information can be on elements of
product cost su as material, labour and production overheads.
an ‘\
Management accounting is separate function from financial accounting.
They a(e both sub departments of accounting department. Management
accounting department is not responsible for recording cash receipts and
payments it is the responsibility of financial accounting department.
Management accounting only make use of financial accounting
ADDA F5, FEI, Pl, P3 Study Materials Free Demo Download E'r ADDA Distance Learning Tuitiun [luurses
n
information for providing feedback to management on their

performance.
8.2 Question (P/P, Q31)

Which of the following statements relating to management information
are true?
1. It is produced for parties external to the organi 10H
2. There is usually a legal requirement for the informatio o be

produced \
3. No strict rules govern the way in w ' h the information is pre nte
4. It may be presented in monet r non—\wnetary terms
A. 1and2
B. 3and4
1
C. 1and3
D.2and4
Solution:
\
Correct ansger is B.
Manageme accounting information ib produced for internal

manageimnt and other eiiplb‘yees to the organization.
2)\
anagement accounting information is not required by law.
I,
Management accounting information is presented flexibility depending
on urgency, relevance to the user and reliability (estimated or actual) of
information reflfiired.
4)
Mana ent accounting information can be presented in monetary
terms such as variable cost and non—monetary terms such as number of
goods reworked. Please! Remember that non—monetary information can
be alphabetic as well as numerical.
Buy Full AEDA FZ/FMA Study Text Bunk (liflfli) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
n
8.3 Question (12/06, Q38)

Management accounting information is financial as well as non
financial. Management accounting reports also involves interpretations
of fact and figures and recommendations on the course of action taken
by the management. A
Data is information that has been processed in such a way as|to be

meaningful to its recipients.
Is this statement true or false? (1 mark)
A. True
B. False
Solution:
Correct answer is B.
Explanation:
Data is separately bits of info ation. Data Q0 b rocessed in some

way to be meani
rmation in itself; it is S‘ierely raw fa ts and figure used to

mation.
formationfor investment
ratio analysis to obtain information
Ret on investme 14% calculated based on data given in

'nan statement to information on profit generated on
in the comp y.
stion (12/06, Q49)

The following st tement refers to a quality of good information:
The‘cost of oducing information should be greater than the value of

the bermfi s of that information to management.
I
Is this statement true or false? (1 mark)
A. True
B. False
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at AEDASLIPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
ADEA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad Ei AEDA Distance Learning Tuitiun [luurses
B
Solu tion :
Correct answer is A.
Explanation:
In general sense, you might have thought B. Howeverj'n business sense,

quality of information is related to cost. Business activities are pursued
to increase economic wealth. If cost of obtaining idformationkes not
exceed benefits then it will lead to reduction in wealth.
$3‘)
n
Exam Topic 2: SOURCES OF DATA
Exam Topic 2:
SOURCES OF DATA
Sub Exam Topics
S.no Headings (click the cross—ref below for easy Pg.no
1 Sources of Data & Information
@CJ'l-bODIO Uses & Limitations of published Informat'
Impact of Economic Environment on C
Sampling Methods or Techniques
Choosing Sampling Methods
Practice Questions & Solutions
Analysis I . .
Composition Sources of data 6examined @text based questions.
Importance Knowledge f this exam ic does ot affect performance
on otheriexam topics. \
n
1 Sources of Data & Information
Learning Objective:
Describe sources of information from within and outside the
organization (K).
1.1 Sources outside the organization

9 Newspaper, magazines and published books.
9 Work done by government departments such as mone ry polic nd
fiscal policy.
9 References from other organizati These c n be competito
suppliers and customers. \
9 Tele communication media such as televislon andfiernet.
9 Labour unions, tradyssociations an hareho rs through general
meetings.
9 Academic and‘pr‘ofsssional education providers.
9 External market research.
ide) ‘nization
ice, GRNflouchers and oth_e inte 1 documents.
Mnformal gossip @apevine) around the organization.
Formal teainmeetings.
9 wmwfiid repblllits.
Intranet and e—mai

9 SUI'VCN the form questionnaires to employees.
9 Observing employees attitudes and morale.
itations of published Information/ Data
Objective:
the uses and limitations ofpublished information/data (K).
Buy Full AEDA FZ/FMA Study Text Bunk (liflfli) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials Free Demo Download E ADDA Distance Learning Tuitiun [luurses
N
2.1 Uses of Published Information

9 Published information is used as cost effective way gathering
information for initial planning.
9 Published information is used for those areas where information
gathering by organization is not possible due to l of expertise or
cost associated with obtaining information. \
9 It is used where information is immediately needed.
2.2 Limitations of Published Informatipn

9 Published information may not be available in a form and
medium organization want " \
9 Published information ca too gqeral and not precisely
applicable to the tye of organization in quest .
9 Published information can create iI‘IfOI'INOII overloéuch as
lengthy booki, ._
9 Informzgm from media such as ternet may e reliable unless
we have t e info tiod on knowlemge an experience of
.~\
I
9 Economic environment decides the demand for goods or services.

Businesgrcycle such as recession or growth can influence what and
hov‘nuch organization produce.
ADEA F5, F5, Pl, P3 Study Materials Free Demo Duwnluad Ei ADDA Distance Learning Tuitiun [luurses
n
9 Economic environment decides the price for goods or services. If

economy is prospering higher pricing can be charged to customer
than if contracting.
9 Economic environment affects the investment decisiglf inflation
increases, it will affect the net present value of f ture cash flows of the
organization. ) \
9 Economic environment affects source and duratiqi of ance to
used for operating organization and g/owt If interest rate'g
expected to rise then, organizati wi I prefer ssuing shares to avoid
interest expense. 2
9 Rise in foreign exchanggatefif ho e currency will make exports
\ “ I
expensive for buying organizatio ther country. So reduce'd sales.
Sa ple enotes'lndividual items selected from a population.
Exam
Selectia 0f10% ofworkforce represents samplefor total workforce as
population.
Buy Full AL'DA FZ/FMA Study Text Bunk (ASfli) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLlMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Dnwnlnad 5 ABBA Distance Learning Tuitiun Dnurses
n
Samples are used to reduce the amount of work, time and cost associated
with research work. Conclusions based on examination of samples are
assumed as conclusion for whole population.
Example:
Conclusion reached on attitudes ofworkforce either
on sample is assumed as attitude ofwhole workfor
4.1.3 Sample Size
Example:
10 out of100 workers are selected
sample size of10.
Sample size depends on judgement of esearcher, which n turn is/

influenced by time available, and cost r ired an eed foT'accuracy of
outcome. k
4
4.1.4 Frequency
Frequency is thi averaggdistance among saiiples in ‘a population.
Lower dist _\ ce ads to higher frequdncy and higher distance leads to

lower frequency.
I
ce at one axis and number of
nfrequency depends on difi‘erent
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnlnad E'r AEDA Distance Learning Tuitiun Duurses
B
Diagram
“ Low Frequency “ High Frequency
4.1.5 Distribution , 7
Distribution is the shape represented by individual coordinates w en
joining them together. flernatively, the wa in which sampl)s is spread
along the graph paper. \ \
Normal distribution is also calle bell shaped curyt means frequency

of samples be educe we will move farther fro means or average.
accasu U I OI't C01
Normal Distribution
Distribution
becau of using sample rather than whole population is used.
In case of low frequency, risk of standard error increase as there can be

situation sufficiently different, which is not covered by sample.
Buy Full AEDA FZ/FMA Study Text Bunk (liflfli) at ADDASUPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials Free Demo Duwnlnad Ei ADDA Distance Learning Tuitiun [luurses
U
Therefore, sample size has to be increased to cover every possible

situation.
4.1.7 Standard Deviation

Standard deviation is the probability that estimated results will be
different from actual results.
4.1.8 Probability
Probability is the likelihood of occurrence or n
particular outcome.
4.2 Random Sampling

Random sampling is a type of non—statistical sampling metiod. is al
called non—probability samplir? .
Random sampling involves se ection o num er of items within

population without any pl nning. In ra om sam ; ing, each samp e in a
population has an equayc’fiance ofbeing selected.
Example: \
le has 1%
Random sampling is 0st effective, e icient ethod and does not require
anyéchnical knowledge, resources a1 planning time for determining
samples.
'tatio
om s pling involves t 'sk of bias by the researcher. Researcher
liberately chd‘ose tho samples which are easy to interview.
'cher may choose workers, which he/she considers cooperative.
Samples selecte based random sampling may not be representative of

whble populat on even if samples are fairly selected by researcher. This
will expose the sample selected to standard error.
Examfl:
Random selection ofmay lead to selection ofmost experienced workers
those are likely to good attitudes towards. This will lead to wrong
conclusion ofresearch work because inexperienced workers are not
interviewed in the research.
Buy Full AEEA FZ/FMA Study Text Bunk (liSlh) at AIIDASUPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
ADEA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad S AIIDA Distance Learning Tuitiun [luurses
fl
4.3 Systematic Sampling

Systematic sampling makes use of statistical techniques.
Systematically sampling is used to reduce the chances of standard error.

It involves usage of unbiased (fair) formula so that wide variety of
samples can be selected, which is more likely to be re ré‘sentative of
whole population. *
However, systematic
randomly. sampling
It forms the input toinvolving selectiol
the formula of firs s amp e
or sellectionxsubseq
variable. Randomly selected sample is als ounted as the sample.
Example:
Selection of5th worker in a payro
subsequent sample is selected
worker (14th, 23th, 32th etc) u {sample size is
4.3.1 Benefits \
Systematic sampling does not involve riskof bias by the researcher.
It helps to reduc the risk of standard error.
4.3.2 Linn” \ /
Samples selected based 0 systematic sampling depends on statistical
forrryla used to selectsa om e population.
i . :' Range in $ Average sales revenue

\ \ customers (Pfibr) * 50 — 150 50,000
300 customers (Middle cl§s_s) 151 — 500 97,650
150 cummers (Ricw 501 — 1000 I 112,575
Stratifiedsampling makes use of stratums (layers).
Samples in‘a pgpulation having identical characteristics are combined

into layers. Range is established for each layer so that characteristics of
each sample’can be determined.
Examglre:
Number of customers who brought goods or services ofvalue from $50

to $150 are grouped into one layer. Similarly, number ofcustomers
who brought goods or services ofvaluefrom $151 to $500 are grouped
second layer, which is placed below first layer.
Buy Full AL'DA FZ/FMA Study Text Bunk (llBllt) at ADDASLIPPDRTDDM I SHARE I [IDMMENT | FDRLlMS I JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnlnad 5 ABBA Distance Learning Tuitiun Dnurses
B
This process continues until all the samples in a population are allocated
to each layer.
From each layer certain percentages of samples are chosen for

examination.
Example:
10% samplesfrom top layer, 20% samplesfrom nd 100%
percent samples from third layer.
4.4.1 Benefits
It provides the basis for justification in case data gathered rekin
undesired outcome.
It allows samples of high impo ce can be identified and makes certain

that no sample of high impo ance is - amined.
Example:
Large amount ofsales reve . w all n rs customers.
Therefore, organization can r ‘ ‘ ' ' of umber of
large number ofcustomers.

e and money to secure small
4.4. Limitations Ir
Strat ' d sampling is\very ti e consuming in terms of allocation of
sample i 0 layers. However, spreadsheet software can do this quickly
and accur ly. ,
Stratified sampling requires data to be available in electronic format in
oYQler to use s adsheet software. If data is not available in electronic
format then aigtional cost will be incurred to convert data into
electronic format.
Stratifgd sampling involves selection of samples from each layer

randomly.
B
4.5 Clustered Sampling

Exam Support:
Do not get confused clustered sampling with systematic sampling.
Examiner would try to dodge you.
Clustered sampling makes use of groups.
Clustered sampling involves grouping of sample '

physically identifiable blocks.
Example:
South).
Samples inside each group mu

other.
Example:
. ( amples) of
difi‘erent economic status such . ‘ iddle clas etc can be
interviewed.
.casupportc
SEIIMLGS in each cluster chosei ould be examined in full. Examination

of part of the cluster will not rovide results, which are representative of
I’
location (cluster) is chosen then all the customers (samples)

economic status should be interviewed.
Result f cluster examined is assumed as result for whole population.
Examfie :
Ifthe East location is interviewed, then interviews ofcustomers in the
East location are considered as viewpoints ofcustomers in other
locations (West, North and South).
Buy Full AL'DA FZ/FMA Study Text Bunk (Agni) at AEDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials Free Demo Download Ei ADEA Distance Learning Tuitinn Duurses
U
4.5.1 Multistage Sampling

Multistage sampling is advanced form of clustered sampling.
It also makes use of groups. It sub divided each groups into sub groups.
Example:
Locations inside the country, can be sub dividend i l'OLUTlS can
be sub dividend into blocks and soon.
These sub groups are also known as secondary groups. \
It is useful where primary group is too la/ge to be used for the purpose of
research. \
It allows the selection seconda

least cost.
Example:
Quota sampling involves selectiqn oiklefin umber of samples from

varioiis categories of population. Populati can be categorized with
respect tohge, sex, ec ndlhic status, cultural background, language etc.
rviewing personsfrom ag_e 25 to 40

viewing personsfrom fige 41 to 55.
selected from each segment depends on
judgenEnt of researcher.
Quota samplin 5 especially useful when demographic balance of

different groulgs known.
Exam]?
Suppo e demographic balance oftwofemalesfor each male in a
country. Based on that researcher can select samplesfrom a particular
category in the ratio of (female to male) 2:1.
ADEA F5, F5, Pl, P3 Study Materials Free Demu Duwnluad Ei AIIDA Distance Learning Tuitiun [luurses
5 Choosing Sampling Methods
Learning Objective:
Choose an appropriate sampling method in a specific situation (Skills).
Exam Support:
Skills cannot be taught. It can be achieve through
applies to all learning objectives requiring skill this eboo .
Choosing an appropriate sampling method is a skillyit isxt knowle‘m

that you can learn. Therefore, you need tgfimow following fact rs to
choose between various sampling techniques. Effectiveness o oice f
sampling method depends on skills of researcher.
Factors ' .Jefi fl
Cost Cost of sampling must exceed benefiés. Cost of obtaining

informatio must not exceed benefit .
Efficiency Samplin ethod should enable research r to ficlude its
researcher within‘available time7\ 3‘
Risk Sam ling method‘should be able to reduce r eliminate the
r' of standard erroi\ H‘ i’
Resources ampling method is feasible using t en, equipment,
material and money available to th organization.
Relevance plingdependinwg‘onr
samples method sho d behelpful
ea 'work. in targeting required
4
m E‘Fmtified I Clustered I Multistage I Quota
Er’ New Y l_0—W__ . I jHigh High High ILow
Effichcyi High \ High 7 Low Low Low iI High
Riki"
S High
Resou-rceNfiess Low
_Less_ Low
More i Low
More Low
More iI High
iI Less
Relevance L‘ow Ldw High i High High iI Low
Under whic sampling method does every member of the target

populayn have an equal chance of being in the sample?
A. Stratified sampling
B. Random sampling
C. Systematic sampling
D. Cluster sampling
Buy Full ADDA FZ/FMA Study Text Bunk (liflfli) at ADDASLIPPDRTDDM | SHARE I [IDMMENT | FDRLlMS I JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demo Download 5 ABBA Distance Learning Tuitiun Dnurses
n
Solution:
Explanation:
A
Stratified sampling involves categorizing samples i to layers Samples
are categorized based on some established criteri)fherefo , each
member of population does not have equal chanci of be' g in the
sample.
B
Random sampling is the selection of sample wit out any plannin . It
means it does not involve any biasajndlequ 1 opportunity of being
selected is available to every si é'saiiip‘ the population.
c p ‘3
Systematic sampling involves the selectioriof mem ers of po ulation
based on established flfimula. Therefore/e member of p ulation
does not have equal chance of being in thfilm le. P
D I.‘
Cluster sampling involves ‘categorizing samples i groups. Samples
having particular characteristics of included in group. Therefore, each
mem er of populatioit does av qual chance of being in the
n
Exam Topic 3: COST CLASSIFICATION & BEHAVIOUR
Exam Topic 3:
COST CLASSIFICATION & BEHAVIOUR

Sub Exam Topics
S.no Headings (click the cross—ref below for easy ‘ ion) Pg.no
1 Production & Non Production Costs 65
2 Elements of Non Production Costs 66
3 Elements of Production Cost '7
4 Reason for Distinction b/w Producti v ' rod ion
Costs A
5 Costs Behaviour 7‘ 72
6 High Low Method 78
7 Structure of Linear Funct' ' .> _ ions 8o
8 Cost Units, Unit Costs, ' st Objects & ost Cent . '
9 Responsibility Centr 83
10 Information Nee - * ibil * Centre 85
11 Practice Questio s & . 86
Analysis '9
Composition FCost classification & ehaviour is ex 1ned as text, visual
Importance & Knowledge
computa 'onf this
based questions.
exam topic can Highly affect
performance e-n-otheligiam topics such as accounting for
material, labour and ov rheads.
B
1 Production & Non Production Costs
Learning Objective:
Explain and illustrate production and non—production costs.
_ A
1.1 Productlon costs
Production costs are the costs incurred in manufacturing progucts
(goods or services). It includes all the cost relati "to activiti
performed inside the production department.
Example:
In chair manufacturing company, co s incur
chair can befollowing:
9 Cutting cost is incurred to c wood into . ' - ces.

9 Assembling cost is incurred t‘oin pgces to m‘2 chair.
9 Finishing cost is in ed to make chair (giro table r . ality.
9 Inspection cost is incurred to ensure cha ir ets quality requirements
of the custo er“.
9 PackagiAst is incurred to ensure chair reacléo customer in good
condition.
. \Non- E F' ‘ a) I
Non—production costs are overhead costs incurred for the purpose other
than maxfiacturing of prqductgf‘N‘ifii—production overheads are incurred
able ent operation of priuction and other organizational
. .es.
' l movement cost to transfer raw materialfrom warehouse to

' n department.
Oflice ent paid to coordinate organizational activities.
Interest expense paid against raisefunds to carryout production and

selling activities.
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at AEDASLIPPDRTDDM | SHARE | DDMMENT | FDRLIMS | JDBS
ADEA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad 5 ABBA Distance Learning Tuitiun [luurses
u
For management accounting purpose, it depends upon organization

policy whether to include non—production overheads into product cost or
not. Organization may want to include non—production overheads for
pricing products to ensure full recovery of all the cost incurred by the
organization from customers. A
For financial accounting purpose, these costs are treated as period cost
(Period cost is the cost incurred during an accou 1g periodkis stated
below the gross profit as operating cost).
2 Elements of Non Production Costs
Learning Objective: ‘
Describe the difi‘erent elements 0 non—pr
selling, distribution andfinan 7.
2.1.1 Selling & Distributio ' Overh . ds \ ‘

It includes
delivery every
to the costs
end " urred
costumer after
(user of the
the ma ufacturin;
prollk
Examples:
e able to . * go 5 when required by
inistration overheads include all costs incurred in planning,

coor ating and controlling the activities and resources of the
anizatkn.
These costs are 1ncurred to ensure the efflclent and effectlve operation
(manufacturing or service provision) of the organization.
Depreciation ofoffice equipments used to record oftransactions made

by organization.
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at ADDASLIPPDRTDDM | SHARE I [IDMMENT | FDRLlMS I JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Dnwnlnad 5 ABBA Distance Learning Tuitiun Dnurses
n
Cleaning and maintenance ofworkplace to provide better working

conditions to employee so that they can work eflciciently.
2.1.3 Finance Overheads

Finance overheads are costs incurred on capital (money rose for
investment in resources, which are needed for admin' a 'on of
organization and manufacturing of products.
Examples:
Interest paid on bank loans, debentures, o
Dividend paid to preference (redeemable) sh
Dividend paid to equity (ordinar

invested is not considered asfi nce ov
(owners) of the organizatio
3 Elements of Prod
Learning Objective:
“tents o roductio : ‘ erials, labour
Dire C
Ideritifiable—Rl'i'ndividfil units of» . 7 Indirect
Non—identifiable Cost
to individual units
product or type of productor cost of products or type of product or
» centre. 2 p cost centre.
Ex ple: Example:
“Qua ofwood use Depreciation of cutting machine.
Signi 'cantihonetary Vllue. Insignificant monetary value

Example:
aking can be of Nuts and bolts used in making
chair can be ofinsignificant value.
Buy Full AL'DA FZ/FMA Study Text Bunk (48Di) at ADDASLIPPDRTEDM | SHARE | DDMMENT | FDRLIMS | JDBS
B
Monetary value can be determined Monetary value cannot be

reasonably determined reasonably.
Example: Example:
Reasonable monetary value of Polished used in finishing ofeach
wood can be determined by chair cannot de 'ned
multiplying price per kg ofwood reasonably.
by it weight of wood used in each
chair. \ ‘
For cost to be classified as direct Indirect cost lacks ohe or mor f
cost all the above conditions should thegconditions require be
be met. classified as direct cost.
Elements of Product cost are as follows:
3.2 Direct Materials (direct cr \ ‘

Material used in the manufacturing of roducts h ving p operties of
direct costs. A
Example:
Direct expe ses incurred in the manufacturing of a Product or operating

a cost cintre having properties of direct cost.
Examples:
Supervisor (foreman) salary expense incurred in construction of a
building (product).
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials Free Demu Download 5 ABBA Distance Learning Tuitinn Courses
0
Salary of Storekeeper to look after inventory in a warehouse (cost centre).
3.5 Production or Factory Overheads [F.O.H)

These are costs having properties of indirect costs.
These costs are incurred for the manufacturing of products in the

production department.
Following are the components of factory overhea costs.
3.5.1 Indirect Materials ./

Indirect materials are the material costs aving properties of indirect
costs.
Example:
Amount ofadhesive materia sed to join pie es wt
3.5.2 Indirect Labour

Labour costs having p perties of indirectecosts.
Semi—skilled & u ' ed Labours are considered indirec’costs.
Reasons:
be tempora . kers soformal records may not be present

' e its cost to I e organization in exact monetary value.
\ 'rect Expenses
ndirect expensss are costs having properties of indirect cost.
They re no dentifiable to individual products.
ExamJ:
How it would be possible to identifyfactory rent expenses to each
individual product?
They may or may not be of significant monetary value.
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at AIIDASUPPDRTIIDM I SHARE | [lDMMENT | FDRLlMS | JDBS
ADEA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad Ei AEDA Distance Learning Tuitiun [luurses
u
Example:
Oiling of delivery vehicles during routine maintenance.
Sufficient financial records may not be available.
Example:
It is usual in most organizations to group all smal into single
account as sundry expenses. Therefore, value of a ch iniv I . l
expense cannot be determined.
Diagram:
v
Full Cost a
Product Cost Period Cost
Production Cost ‘ Non Production Cost
m
Direct Cost Indirect Cost Ind'rect Cost
V I .
Direct Materials Production Disseilrli'ggfii‘n
1 Overhead Cost Overhead Cost
Direct Labour ‘
, Indirect Materials
_ Administration
Direct Expense ‘ Overhead Cost
Indirect Labour ::
‘ Finance Overhead
Indirect Expense Cost
m)
4 Reason . ' istinction b/w Production & Non Production

\sts
Learn' g Objective:
Explain the importance ofthe distinction between production and non—
production costs when valuing output and inventories.
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad E'i ADDA Distance Learning Tuitiun Dnurses
Importance Details
Planning Budgeting Distinction b/w production and non
production costs allow allocation of
resources between resources needed for
production and resources needed for
undertaking operating (administration,
selling & distribution) activities.
Forecasting It allows estimating foductfi'n‘afi non—
production cost separately. Koduction cost
usually changes with produc n and sales
volume. Nonfl) roduction cost such as
administration cost usually chang with
operating philosophy of the organiza ion
than roduction and sales volume.
ment fol‘set product—
Decision Pricing It
ables ma
making ling prq: more rasnally. Production
costs which are direc identifiable fo the
products can be 'ustifi d to cus er where
as non producti&costs are tre ted as
period cost because it would be unfair to
charge customers for a inistration and
selling c‘ost. They arex st to the
i organization itself. Y
ix ' I It allo finding appropriate product mix
‘Tcbmbin ion’éf products) for production
to the
and‘ abillI recognizing products according
sale’b
ty to incur operating cost to the
OYganiZa'tiOn. So that those products
ge rating lower gross profit than operating
cost incurred could be weeded out.
Performance ‘I'ft enables senior management to held
measuremiit accountable operational managers for their
s area of responsibility such as production,
sales, administration and finance etc.
Re orting Financial reporting standards require
separate disclosure of production and non
production cost. Separate information
available for production and non—
production cost help to discharge
responsibly under financial reporting
requirement.
Buy Full AREA FZ/FMA Study Text Bunk (48|]i) at ADDASLIPPDRTEDM | SHARE | DDMMENT | FDRLIMS | JDBS
n
5 Costs Behaviour
Learning Objective:
Explain and illustrate with examples classifications used in the analysis
of the product/service costs including by function, dire t. Fixed and
variable, steppedfixed and semi variable costs.
Describe and illustrate, graphically, difi‘erent til
All the types of costs discussed above can have one mo e of the
following cost behaviours. / \
5.1 Variable Costs (Marginal Costs)/ i‘ .\ ‘
Variable costs change in proporti n with change in he activit level
(sales volume, units produced) '
Example:
Material cost will incr
ch additional unit purchased
vel is subject to higher tax rate.
B
Diagram:
Coat
\
IIieirieiile cast
Activity Level a
5.2 Variable Costs per \

Variable costs per unit remain constant re ess of chang 1n activity
level.
Example:
Material c aterial cost per unit
‘ rizontal straig t l' e when plotted on graph, but

practice 1s diffe ' ent because of e omies of scale (bulk purchase
discounis) or‘diseconomies of scale (penalties for additional usage).
ple:
' 1 cost per un unit would be lower ifsupplier oflers
n each extra purchased after 100 units.
n
Diagram:
a
5 Iiiariatile cost per unit
El
Activity Level K
"x
5.3
I
Fixed Costs
. \ \
Fixed costs are costs, ich ,emain constant regardless f c ange in
activity level. ~
However, fixed costs only’ remain constant within 1' ted range of
activity levpl'. Beyond that range, it may no longer e fixed.
‘
It me ns fixed costs are fixed only i1 hort—term. In the longer—term
org 1zation’s act' 'ty‘level may be di erelrf resulting in different fixed
When plotted on graph, it gives horizontal straight line same as variable

cost per unit.
n
Diagram:
Coat
Fixed cost
QJ
Activity Level
I '-'~ \ ‘
5.4 Fixed Costs per UH? \
Fixed costs per unit de rease with the increa‘n the activit evel.
Reason is that, total fixed cost will be charged to mo

(activity level than befor . As a result fixed costs p nit fall.
if budgetedfixed cost ofsame

nfixed cost per unit will be equal
Diagram:
Cost
Fixed cost perunit
\
\
Activity Level X
I _
5.5 Step-Fixed Costs ‘
Step—fixed costs reicosts, which ise in steps. These osts remain
constant wit ' tie range of activity level, and\the
the next ra e of activity level.
In longer term, fixed costs t tob tep fixed.
nection, base package can be of

eed mit, additional 812 can be charged
Buy Full AEDA FZ/FMA Study Text Bunk (liflfli) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRIIMS | JDBS
n
Diagram:
Y.
Step-fixed cast \
a I
Activity level H
5.6 Semi-Variable Cos \ “\

Semi—variable costs are costs, hich have both variable and fixed
elements. A\
Semi— variable costs start 'th certain amount of f' ed cost, and then
subsequent costs are varia le cost.
. 1 \
Do Mt get confused t‘ it with step-fixed c . Step fixed costs does not
necessary arise in prognortion (linearfashion). While in semi—variable
cost, variable (part rises in‘p‘l‘oportion.
n
Diagram
Sernl- variable
\\cost .f/
Coat
/
/’
Xxx’
/
“
/
Activitv Level E
r s
5.7 Total Cost X
Total cost is the sum 0 all a ove costs. If it" '11 involve fixe cost then it
will be greater than zero at zero activity level.
Total cost
\
Coat
Activilv Level ii
6 Hig owMethod
Learning Objective:
Use high/how analysis to separate the fixed and variable elements of
total costs including situations involving semi variable and stepped
fixed costs and changes in the variable cost per unit.
Buy Full ADDA FZ/FMA Study Text Bunk (liflfle) at ADDASUPPDRTDDM | SHARE I [IDMMENT | FDRLlMS I JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad 3 ABBA Distance Learning Tuitiun Dnurses
It is used to split total cost and semi variable cost into its fixed and
variable components.
To forecast total cost at given activity level.
Formula:
Highest total cost —
Variable cost p er unit = Highest activity level
Fixed cost I Total cost at highest A. L — (Highe
Total cost I Fixed cost + (Forecast activi
6.1 Applying High Low Method
Illustration
Following data relates E) ABC plc. \
e fixed and variable’omponents of the total cost.
, highest anwest activity level as in this case is production

volumes.
9‘ Highest prqFrction volume = 13,000 units.

9 Lowest pro uction volume = 9,000 units.
Step2,
Determining variable cost per units using highest and lowest production
volume and corresponding costs.
n
Highest total cost — Lowest total cost

Variable cost per unit =
Highest activity level — Lowest activity level
$13,200 — $12,000 _ $1,200 _

Variable cost per unis = 13,000 _ 9,000 — 4' 00 — $0.3
Step3:
Determining fixed cost.
Fixed cost = Total cost at highes ighe .L

>< Variable cost per
A
Fixed cost = $13,200 — (13,0 0 X $0.
7 Structure of Linear Fun ons & Equahons
Learning Objective:
Explain the structure 0 .k
‘I i
‘s
Linear means
7.1 Linear traight.
Relatic 7' ' L'mear line eans straight li .
nsl’ip is the fashion in wh ch variable increases or

' ' e st ' ht li if plotted on graph paper.
, correspon . es revenue of $2,000, $4,000 and $6,000

'ded with sal .
This can be said as linear relationship between sales volume and sales
revenue bec?selling price per unit will result in a straight or linear
line if plotte on graph paper.
7.2 T es of Linear Relationships

There are following types of relationship exists between variables, such
as production volume (x) and total cost (y).
9 Direct or Positive Linear relationship.
Buy Full AL'DA FZ/FMA Study Text Bunk (48Di) at AIIDASUPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
B
9 Inverse or Negative Linear relationship.

9 Non—linear relationship.
9 Spurious Linear relationship (having linear relationship but do not
have any meaning).
7.2.1 Direct Relationship

Diagram:
Increase or decre e in one variable lead to incre or decrease in

other respectively.
7 2 2 Ind ‘S
Increase or decreas 1n one variab lea to decrease or increase in
other variable respectively. ‘
Linear Relationship
Co—or mates of variables if plotted on graph paper do not result in
straight line.
n
Diagram:
decrease/decrease
7.2.4 Spurious
Increase orin
increase
Relationship
or decrease i . * resullin
one variab = ‘ . : 1ale respectively.
increase or However,
.
variables are not responsible . the change 1 other.
Example:
Increase in birth rate i d n 1 inc 0 0t an increase
and decrease at the same tim ‘ t me tha. 'onal income is
responsible incre '1 birth rate.
Similarly, i - ket deman . and decrease in total

cost can I 0 e time. It do an that increase in
marke v - i n ' or dKCI‘QG total cost.
‘ ‘ ’
m v‘
*1
8 Co
Learning Objective:
its, Unit Costs, Cost Objects & Cost Centres
Explain and illustrate the concept ofcost objects, cost units and cost
centres.
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad E'i ADDA Distance Learning Tuitiun Dnurses
Cost Units Unit Costs Cost Objects Cost Centres

Cost unit is Unit cost is Cost objects are Cost centre is
individual measurement inputs used to department or
product for basis for make products. area of the
which cost is product. olrganization
calculated. Exa mple: responsible for
Exam '18-‘ Material cost 1 urred.
Example: Unit costfor Oil (wood),
Cost unitsfor can be per Labour a
automobile litres overh '
company can _ (elec
be Car, Unit costfor usd in m
metals can be ~irs.
per kg or
pounds. J
tran , or
ayt ills.
9 Responsibilit Centres
Learning
Distinguié. mirofiuinveé ~ ent an revenue centres.
H 7
Responsibility centre are collective term f all below centres in an
o ' .. nization. )
estment centre
(Head Office)
Profit centr 1 Profit centre 2

(West branch) (East branch)
Cost centre Revenue centre Cost centre Revenue centre

(Production) (Sales) (Purchase) (Sales)
Buy Full AIIEA F2/FMA Study Text Beck (4801) at AL'EASUPPDRTIIIJM | SHARE | EDMMENT | FDRLIMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demo Duwnluad 8 ABBA Distance Learning Tuitiun Duurses
U
9.1 Cost Centres

Cost centres are those functions or departments of the organization
having an authority to incur costs within the limits of their authority
and assume equal responsibility to account for those costs.
Example:
Production department having authority to incur
products and having equally responsible to acco
Similarly, marketing and research & develoEment deparments havfig

authority to incur costs for product pro n and developme t
respectively and having equally responsi le fdfi costs incurred ' hin the
limits of their authority. I
9.2 Revenue Centres ‘1 /

Revenue centres are those fun ions 0 departments of a organiza on
having an authority to generate reve es probfiily by selling products
and are equally respony'ole to account f ose reven es generated for
the organization. '
Example:
, divisions and branches of an

having authority to generate profits and are equally
ed in branches such as east and west

branch has complete authority to set
and incur costfor goods or services according to local
rditions.
Profit centres c include several cost and revenue centres.
ProfiRentres are higher in organizational hierarchy at tactical level,

rather wan cost and revenue centres which are at operational level in an
organization.
All cost and revenue centres report to/from their respective profit
centres.
B
Example (continued):
Each ofthe branch (profit centre) has their own sales (revenue centre)
and production & marketing (cost centre) departments. These cost and
revenue centres report on their performance to their respective
branches.
9.4 Investment Centre

Investment centre are autonomous entity havin thority
investments and responsibility to account t investwnts.
It does not mean that other responsibilitwentres cannot make

investments. They can, but their authority is limited to certain amoun of
investment. ‘
Example:
Purchase of new printer by anch.
Investment centre are Q1 head office the organization ere

major investment decisions re made. '
Example:
Purchase of I
Investment
Descri e the diflering needsfor information ofcost, profit, investment

and revenue centre managers.
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at AEDASLIPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
ADEA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad Ei ABBA Distance Learning Tuitiun [luurses
Cost centre Revenue centre Profit centre Investment

centre
Cost centres Revenue centres Profit centres Investment
need detailed need detailed need moderate centres need
information information information to brief
for day—to-day for day—to-day be able to information
decision—making decision—making control for ajor
purpose. purpose. performan of pa and
their cost and xitmlling
revenue centres. p orman of
64 5 their rofit
centr nd cost
\ I and revenue
_ V \ ‘ centres. J i
Cost centres Revenue centres Profit centres Investment
need frequent need frequent centres need
information on information 0 least frequent
timely basis, timgg'basis, inf(?iiation,
such as on such as on\ as on
weakly, daily or weakly, daily or such as on early basis
unplanned Imlanned monthl basis.
basis. basis.
Information Information ‘ Information Information
would e on would be on \ would be would be
cost nd revenues ‘55d \Iariyce reports, financial and
' sales volume such as on non—financial,
forecasts. material wastage such as on cash
and machine flow position
. break down. and government
policy on
taxation.
ctic Ques tio: 8: Solutions

tion (12/06, Q28):
isati n manufacturing a number of different products in one
1'1 an orga
large factoryfi rent of that factory is an example of a direct expense
when‘costin a product.
Is this atement true or false? (1 mark)
A. True
B. False
n
Solution:
Explanation:
In this case, cost object is a product rather than a factgry. Rent expense
relates to factory and factory is used to make more an one roduct.
Therefore, amount of rent is not directly identifi e to the p uct.
Therefore, it is not a direct cost for the produc \
However, if factory is only used to make 5' gle product than we coul
identify rent expense as cost related toAthat type of productbut rgrlt
expense will be still unidentifiable to number of units of tlKro ct.
11.2 Question (12/06, Q17): ' \ \

A manufacturing organisatio curs osts re ating to the following:
(1) Commission payable to salespersons.

I
(2) Inspecting all products. .
(3) Packing the prtiiucts at the en of the manufact ng process prior to
moving they to the warehouse.
Which of these costs are classified as producti n costs?
Abfind (2) only ‘i I
B. 1) and (3) only\ ‘
Ckid (3) only L
- (1 , )and‘ta) ~
Commission payable to sales person is obviously classified as selling

cost.
(2)
Inspection of products is done in production department. It is because
inspection is part of production process. Inspection is made to check the
quality of earlier production processes.
Buy Full AREA FZ/FMA Study Text Bunk (48|]i) at AIIDASUPPDRTIIDM | SHARE | DDMMENT | FDRLIMS | JDBS
n
(3)
Packing products is part of the product. Packaging adds value to the
product just as main product itself. Therefore, it is considered as
production cost.
11.3 Question (12/06, 012):

Which one of the following should be classified as indirect labour?
A. Assembly workers on a car production line

B. Bricklayers in a house building company
C. Machinists in a factory producing c thes
D. Forklift truck drivers in the stores f an‘engineering company.
Solution:
Correct answer is D.
Explanation:
A
Assembly is core activity in th .rnanufacturing f ca . Cost of assembly
7
work can be dire d reliably identifiabli) each ar.
B
Same
& Creasoni as a ve are) applicable fo bricklayers and machinists.
D
Flrklift truck drivers are used in the stbres department outside the
production department. Stores department is established to facilitate
efficient upplyof raw materials forproduction and finished goods for
sel ' 1g. reforejsalaries of f0 ift drivers cannot be directly identified
product or departmen . Hence, it is classified as indirect labour
wevstio (12/06, ((5)

A semi— ariable cost is one that, in the short term, remains the same over
a iven range of ctivity but beyond that increases and then remains
co tant at the Higher level of activity.
Is thisynent true or false?

A. True
B. False
n
Solution:
Explanation:
Semi variable cost has an element of both fixed and varialgke cost. Semi
variable cost remains constant until it starts to change. Once 't begins to
change, it changes in proportion (straight line) ' h each adcgnal unit
increase in activity level. 2
The above statement represents the definition of step fixed cost rath
than semi variable cost. 3
11.5 Question (12/06, Q16: P/P, Q

Up to a given level of activityi
of a raw material is constant ter th point, a lower price per unit
applies both to further un'ts purchase
already purchased. &
Which of the following graphs depicts the tota cost of the raw materials
for a period?
‘ H
E A E
Buy Full AEEA FZ/FMA Study Text Bunk (liflflt) at ADDASLIPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
ADEA F5, F5, Pl, P3 Study Materials Free Demu Duwnluad 5 ABBA Distance Learning Tuitiun [luurses
n
Solution:
Correct answer is D.
Explanation:
Broken line suggest subsequent fall in raw material cost since zero
activity level after availing bulk purchase discount. .
A
Cost of raw material is usually variable unle s suppliers Montracfid to
supply particular quantity raw materialsxegular intervals. Therefore,
we will assume raw material cost as tota variable cost in the a nce of
additional information.
B ‘
Graph A does not represent raw mate 'al cost ecause after availing bulk
purchase discount it does liot decrease zero at ro activity level.
Graph B does not repr sent raw material ecause it is rlzero at

zero activity level from beginning.
esent raw material cost bec se it does not reflect
Graph D rep \sent raw material cost because it reflects retrospective

change IIKEIW material cost after availing bulk purchase discount.
lLac‘uestion (12M
or which of the following ' a profit centre manager responsible?
A. Cos§nly *
B. Revenues only
C. Cost and evenues.
Explanation:
Profit centre must be responsible for cost as well as revenues so that it

can be held responsible for profits of the organization.
Buy Full ADDA FZ/FMA Study Text Bunk (liflfli) at ADDASUPPDRTDDM | SHARE I [IDMMENT | FDRLlMS I JDBS
n
11.7 Question (P/P, Q45):

The following statements relate to responsibility centres:
(1) Return on capital employed is a suitable measure of performance in

both profit and investment centres. ‘
(2) Cost centres are found in manufacturing organisations b t not in

service organisations.
(3) The manager of a revenue centre is responsible for b0 sales a

costs in a part of an organisation. I
Which of the statements, if any, is tr
A. 1 only
B. 2 only
C. 3 only
D. None of them
Solu tion :
Correct answer is
(1) - .-
ROQE(return on capi l employed) takes count of investment made by
the organization. 1 efore, profit centres performance should not be
evaluated based on ROCE because it does not have 100% control over
investme ts. ROCE is useful for evaluating performance of investment
ce re an heir managers.~
exists in hot anufacturing organization as well as service
ere mechanic repairs vehicles.
lClassro in the school where professor delivers lectures.
(3)
Manager of revenue centre is only responsible for sales. Revenue centre
is different from profit centre. Later is responsible for revenues as well as
costs.
n
$0)
n
Exam Topic 4: PRESENTING INFORMATION
Exam Topic 4:
PRESENTING INFORMATION
Sub Exam Topics
1 Preparing & Representing Reports
2 Presenting Information Using Tables, Gr
3 Interpreting Tables, Charts and Graph
Analysis \ A’ \ 4
Composition Presenting information is\examine\d as text based
questions. ' tfi \
Importance Knowledge of s exam topmoes not liighly affect
performanc on other exfirn topics.\
Buy Full AEEA FZ/FMA Study Text Bunk (liflflt) at ADDASLIPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
n
1 Preparing & Representing Reports
Learning Objective:
Prepare written reports representing management information in
suitableformats according to purpose.
1.1 Users of Reports

Management information reports are different f reports as
annual report, which are required for external reportingmirpose.
Users of management information repouAiinternal to the

organization. Management at different\levels strategic, tactica d
operational) require information to planning, decision making and
control purpose. 7 \
1.2 Purpose of Reports

Purpose I . .ils
Planning Planningpquires
information. bothinvolvesasqwnwards
Planning financi l and n—fina 1
co munication
from senior management to junior management. Senior

management need to communicate plan to junior managers
effective implemen‘l‘ation of plan!
Control Con 01 usually requires financial in ormation such as
variances. Control involves upwards communication from
juniqr management to senior anagement. Senior
management need informatlon from junior management
\ involved in day-to—day operations to be able to exercise
control. i i a,’
Decision-making r quires both financial and non—financial
information. Decigon—making requires the use of planning
and control rep'brts as well as reports on ad hoc
(unplanned) basis according to opportunity or threat faced
>by management at different levels.
t of Reports
1. .
Nam of per on being report is mentioned.
1.3.2 Ffli
Name of person reporting is mentioned.
n
1.3.3 Date
Date represents the time at which report is written. However, date of
receipt can be different from date it was written depending on the
channel of communication (electronic, post etc) selected to send report.
1.3.4 Subject ’
Purpose of report is mentioned. It should be brief no mgre than one line
so that reported person can quickly get an idea a t the 's‘ubjfit matter
(topic) and urgency of action needed.
1.3.5 Introduction
Scope of report is mentioned. Introduction give brief descri of
information contain in the following report. Introduction sl ould nab
manager concerned to quickly get an ove 'ew of the report. should
no more than three to four III?
1.3.6 Body Text \ F
Body text contains the tailed informat Body
several headings and sub headings. \
Headings should be: descriptive and should enable manager to have an

idea about the underlyin information. Manager s "uld be able to
navigate to levant information quickly.
Order of writing should be logical. Ihmeans i should present all

neces's'a informatiop‘ at single place witlwut requiring manager to move
bac and \rth again and again. However, supporting information can be
represented in appendix.
1.3 App dix \ ‘ /

App dix contains a l for supporting and related information in the body
text. App ndix should‘lie properly cross-referenced so that reader can
quickly fiknformatioyin appendix.
Worization
uthorizatiqn i he signing of report before it is sent to the manager
being reported. Authorization suggests the recipient that report is sent
and reviewedby appropriate person.
2 Preénting Information Using Tables, Graphs 8: Charts
Learning Objective:
Present information using tables, charts and graphs (bar charts, line
graphs, pie charts and scatter graphs)
Buy Full AEDA FZ/FMA Study Text Bunk (ABfle) at AEDASLIPPDRTEDM | SHARE | DDMMENT | FDRLIMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnlnad E'r AREA Distance Learning Tuitiun [luurses
2.1 Tables
2.1.1 Benefits
Tables are cost effective and easy to present.
Tables are used to compare data and information.
Tables are used to analyse trend.
Tables are used to summaries information. \
Tables save time as it avoids relabeling data and information each time
they are presented. I r \
Tables have only two dimensio

2.1.2 Limitations it can 0 accommodate
only two variables.
Tables are not useful ftyxplainirklkd ' cussing financial an non

financial issues.
Tables require the understanding of language to present and read.
Selling price
unit
Currency
\
Cost per unit
Sales volume X
2.2.1 Benefits
Line graphs are time consuming to present manually.
ADDA F5, F5, Pl, P3 Study Materials Free Demu Download 5 ABBA Distance Learning Tuitiun [luurses
n
Line graphs are also difficult to present manually. It requires artistic skill
to draw neat and clean graph. However, spreadsheet programs such as
Microsoft Excel or Lotus can do it automatically and cost effectively
using data fed.
Line graphs are used to present data visually.
Line graphs can be used to graphically present th a cm of (‘e

variable due to increase or decrease in other v ble. \
Line graphs have three dimensions such1?. X, Y & Z axis. It can be used
to present relationship up to three varia es.
A‘
Line graphs also

can be
show
used
extre
to showncreasembrease
trends. \ ‘Iin ariable.
' \
Line graphs can accommodate more than Qxne lineghe performance of
different entities (orgafi‘z’a 'ons or individua ) regar ing same variable
(for example, sales) could be ompared.
not accommodate alphabetic data there it cannot be

nt non-financial information.
Grays require statistical knowledge be ad.
atter
. : efits
Scatter raphs can be quickly (‘12wn manually.
Scatt‘ raphs can IQlSGd to find relationship (direct or indirect)
between two variables. ~
\
Scatter graphs can be used to find trend (increasing or decreasing).
\
Scatter graphs e used for forecasting where accuracy is not necessary.
2.3.2 , ions
Scatter aphs do not provide 100% accurate results. Line of best is
drawn ased on observation where majority of the coordinates can be
joined using one straight line.
Graphs require statistical knowledge to be read.
Buy Full AEEA FZ/FMA Study Text Bunk (liflflt) at AE'DASUPPDRTDDM | SHARE | DDMMENT | FDRLlMS | JDBS
n
2.4 Bar Charts

Diagram:
$1k Sales revenue

Qqst of saig
6 Scale = $(000) \
,Q1 Q2 Q3 Q4
2.4.1 Benefits i
Bar charts can he used Igpresent ata visually.
Bar charts have two dimensions. Barhiarts enabl comparison of

variable more accurately as it provi es scale for’measurement of
variables along the verticalf-Tax-is. H weve'ft can also present those
' le's along the horizontal X—axis
iable. Bar charts can be used to present

quarter during the year on X axis and
unit (Pounds) at Y-axis.
Bar charts canrcommodate more detailed analysis of variable. Each

variable can be assigned different colour.
Exam];
Sales revenue generated by each product at each quarter during the
year.
Similarly, bar charts can use more than one variable.
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at ADDASUPPDRLDDM I SHARE I DDMMENT | FDRLlMS I JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnlnad E'i ADDA Distance Learning Tuitiun Dnurses
u
Example:
Bar charts can accommodate barsfor sales revenue and cost ofsales at
each quarter during the year.
2.4.2 Limitations
Bar charts are not suitable for presenting trends.
Bar charts only show position of variable (sales) articu erval

such as Quarters. Bar charts do present moveme t in va 'ables between
two intervals. \
Bar charts are time consuming to draw manually. Howev , adsheet

software can quickly do it. i
Bar charts cannot be used for f cas 'i'ng purpose.
Graphs require statistical linowledge to e read.
2.5 Pie Charts

Diagram:
‘
Sales Unlume
T___——___any Product A:
e = Yellow
Green
f)...‘- ‘ERIE
Product 0 = Green
‘TIM-“Ram
\1 lll'tll
||l ‘Eur-Lu ||l
lI I
II |
'1 i r If
s f
x I
4.. 5______;#,.#
Pic charts are used to present data and information visually.
Pie charts gives information in fraction. Fractions are understandable by

non—financial managers easily.
Buy Full AREA FZ/FMA Study Text Bunk (48|]i) at AIIDASUPPDRTIIDM | SHARE | DDMMENT | FDRLIMS | JDBS
ADDA F5, FEI, Pl, P3 Study Materials Free Demn Duwnlnad E'r AEDA Distance Learning Tuitiun [luurses
B
Example:
Let sales volume be the variable. Pie chart can be used to present sales
volume generated by each product.
2.5.2 Limitations
Pie charts have only one dimension. Therefore, it cannot a commodate
more than one variable.
Pie charts do not provide 100% accurate informa on. It because it

provides visuals rather than numbers.
3 Interpreting Tables, Charts and Graph
Learning Objective:
Interpret information (includ ' '
presented in management r 0 'ts.
See the benefits and li ' ations of presentin tableg, charts . a‘ graphs.
If you know how to present them then you cgnterpret the
Market 1 l00,_000
Market 2, @QOO
&1 let wavy)
Tot 300,000
11 a pie chart, represe e proportion of sales made by each region
what wowe the angl the section representing Market 3?
A. 17 degrees
B. 50 degrees
60 degrees
D. 20 degrees
Solu ti;
Correct answer is C.
B
Explanation:
Pie chart is round in shape therefore it represent 3600 degrees angle for
total sales or 100% sales.
_ 50,000
Sales % X 100 = 60% or d
_ 300,000
as
Buy Full AEHA FZ/FMA Study Text Sunk (ASHE) at ASHASIIPPDRTHHM | SHARE | HHMMENT | FDRHMS | JHBS
AHSA F5, FEI, Pl, PS Study Materials Free Demu Duwnluad S ASHA Distance Learning Tuitiun [luurses
a
Exam Topic 5: ACCOUNTING FOR MATERIALS
Exam Topic 5:
ACCOUNTING FOR MATERIALS

Sub Exam To ics
S.no Headin s (click the cross—ref below for ea 'on) P .no
:6©O \lO\(fl-l>OQNI-‘ es of Invento 103
Invento Cost Com osition. 103
Orderin , Receivin &Issuin Materi 03
Invento Control
Accountin for Material Invento C
Orderin &Holdin Invento
O timal or Economic Order (EO
0 timalRe—Order uan' hase D1
O timal or Economic ch uanti B )
Invento Level Ma nt
Invento Valuati
12 Practice esti &
Exam To ic Awareness
Anal sis
Com osition
Im rtanc
B
1 Types of Inventory
1.1 Raw Materials
1.2 Work in Progress (WIP)
1.3 Finished Goods
1.4 Administration Related Inventory
2 Inventory Cost Composition.
2.1 Direct Raw Material
2.2 Direct Labour
2.3 Direct Expenses
2.4 Production Overheads (indirect mater‘
expenses)
3 Ordering, Receiving & Issuin ‘
3.1 Documents & Procedure for O '
3.3.4.1 Contents ofSales Return Note

4 Inventory Control
4.1 Store Ledger Card
4.2 Free Inventory
ADDA F5, FEI, Pl, P3 Study Materials Free Demu Duwnlnad S ADDA Distance Learning Tuitiun Courses
0
4.3 Physical Stock Taking

4.3.1 Continuous & Periodic Stock Taking
5 Accounting for Material Inventory Account
5.1 journal Entries
815$)
n
5.2 Ledger Entries

6 Ordering & Holding Inventory
6.1 Ordering Cost
6.1.1 Calculating Inventory Ordering Cost
6.2 Holding Cost
6.2.1 Calculating Inventory Holding Cost
6.3 Stock Out Costs
6.4 Buffer Stock
6.4.1 Calculating Holding Cost Including Buffe Inve 1tory
7.2 Limitations of EOQ

8 Optimal Re-Order Quantity
9 Optimal or Economic
9.1 Calculating Economi '
10 Inventory Level
10.1 Reorder Level
10.1.1 '
10.2 Re-Order '
10.3 Maxim
ventory V uation Using LIFO

' hted Average Method
Inventory Valuation Using Weighted Average
Vs Weighted average
g Cost of Sales, Purchase, Opening &Closing Inventory
11.6 Pe 1c Inventory System
Margin
11.6.2 Mark up
12.1 Question (12/06, Q4: P/P, Q43):
12.2 Question (12/06, Q23: P/P, Q20):
Buy Full AL'EA FZ/FMA Study Text Bunk (480:) at AEEASLIPPURTIIIJM | SHARE | EUMMENT | FURIJMS | JOBS
ABBA F5, FEI, Pl, P3 Study Materials Free [Iemu [luwnlnad 5 ABBA Distance Learning Tuitinn Euurses
12.3 Question (12/06, 021; P/P, Q47):
n
Exam Topic 5: ACCOUNTING FOR LABOUR
Exam Topic 6:
ACCOUNTING FOR LABOUR

Sub Exam Topics
S.no Headings (click the cross—ref below for easy :; .tion) Pg.no
1 Direct & Indirect Labour Costs 108
@U‘l-bOQIO Methods for Relating Labour Cost to Wor 0 one 108
Accounting for Labour
Remuneration Schemes
Labour Turnover
Efficiency, Capacity & Producti ' n Volum s
‘k
7 Practice Questions & Solutio '
Exam Topic Awareness i i
Analysis I Deta 5
Composition
Importance
ADDA F5, FEI, Pl, P3 Study Materials Free Demo Duwnlnad E'r ADDA Distance Learning Tuitiun [luurses
n
1 Direct & Indirect Labour Costs

1.1 Direct Labour Costs
1.2 See calculations later.
2 Methods for Relating Labour Cost to Work Done
2.1 Documents Used to Record Labour Costs
2.1.1 Attendance Sheet
2.1.2 Time Sheet
2.1.3 job Sheet
2.2 Steps involved in Relating Labour Cost to
3 Accounting for Labour
3.1 journal Entries for Labours
3.2 Ledger Entries
4 Remuneration Schemes
4.1 Time Based Schemes
4.1.1 Characteristics of Tim
4.1.2 Hourly Rate Basis
4.1.3 Wage Rate Basis (Daily or » eekly)
4.5 Gr p Bonus Schemes

5 Labour Turnover
5.1 Labour Turnover Causes
5.2 Labour Turnover Costs
5.3 Calculation of Labour Turnover Rate
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at AEDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials Free Demu Duwnlnad Ei ADDA Distance Learning Tuitinn Courses
0
6 Efficiency, Capacity & Production Volume Ratios

6.1 Efficiency Ratio
6.1.1 Limitation of Efficiency Ratio
6.2 Capacity Ratio
6.3 Production Volume Ratio
6.4 Calculate Efficiency, Capacity & Production Volu
7.2 Question (12/06, Q44: P/P, Q29)
Buy Full AEEA FZ/FMA Study Text Bunk (480:) at AL'EASUPPURTIIIJM | SHARE | EIJMMENT | FURLIMS | JUBS
ASSA F5, FEI, Pi, P3 Study Materials Free [lemu [luwnluad Ei ASSA Distance Learning Tuitiun Suurses
n
Exam Topic 7: ABSORPTION COSTING SYSTEM
Exam Topic 7:
ABSORPTION COSTING SYSTEM

Sub Exam Topics
S.no Headings (click the cross—ref below for easy ‘ ion) Pg.no
1 Treatment of Direct & Indirect Expenses
2 Absorption Costing i
3 Calculating Products Cost Using Abso Li; {
4 Allocation (Step1) & Apportionment rod ‘ ion
Overheads A
5 Re—Apportion of Service Costs ' Produc v-ntre
(Steps)
6 Pro—determined Overhea
7 Accounting for Overhe . .
8 Under or Over absor ' 111
9 Practice Question 111
Exam Topic Aware ss
Analysis
Composition
Importance J
B
Exam Topic 7: ABSORPTION COSTING SYSTEM
-I>UJI\JH Treatment of Direct 8: Indirect Expenses

Absorption Costing
Calculating Products Cost Using Absorption Costing
Allocation (Step1) & Apportionment (step2) of Production
Overheads
4.1
4.2 Allocation of Overheads to Production Cost C .
4.2.1 Allocating Overheads to Cost Centers
4.3 Apportion Overheads to Cost Centres
4.3.1 Apportioning Overheads to Cost Ce
(Step3)
5.1.1 Reciprocal Method (Repea '
5.1.3 Other Methods

5.1.3.1 Direct Method
5.1.3.2 Step Down Method
6 Pre-deter '
6.1 Blanket 8
n
Exam Topic 8: ABSORPTION & MARGINAL COSTING
Exam Topic 8:
ABSORPTION & MARGINAL COSTING

Sub Exam Topics
1 Marginal Costing 113
2 Contribution 113
3 Absorption Costing & Marginal Costing
4 Calculate Profit or Loss under Absor '
Costing
5 Reconciliation of Profit & Loss
Marginal Costing
6 Practice Questions & Solu‘ .
Analysis
Composition
Importance
Buy Full AEDA FZ/FMA Study Text Bunk (liflfli) at ADEASLIPPDRTDDM | SHARE | [IDMMENT | FDRDMS | JDBS
n
Exam Topic 8: ABSORPTION & MARGINAL COSTING
1 Marginal Costing
2 Contribution
2.1 Calculating Contribution & Profit in Marginal Costing
2.2 Uses of Contribution
2.3 Contribution Vs Profit
3 Absorption Costing & Marginal Costing
3.1 Relationship between Profit, Cost OfSales & CI
3.2 Effects ofAbsorption & Marginal Costing o
3.3 Summary
3.4 Behavioural Aspects of Absorption Co
Costing
6 Practice Questions & So
6.1 Question (12/06, Q8: P
6.2 Question (12/06, Q
Buy Full AEEA FZ/FMA Study Text Beck (4801) at ADEASUPPDRTIIDM | SHARE | EDMMENT | FDRLIMS | JDBS
ASSA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad El ASSA Distance Learning Tuitiun [luurses
n
Exam Topic 9: JOB & BATCH COSTING
Exam Topic 9:
JOB 8: BATCH COSTING

Sub Exam Topics
1 Job Costing & Batch Costing
GUI-ROOM Uses of Job & Batch Costing
Benefits of Internal Job Costing
Accounting for Jobs & Batches
Calculating Job & Batch Costs
Analysis I
Composition I
Importance I
n
Exam Topic 9: JOB & BATCH COSTING
1 ]ob Costing & Batch Costing

1.1 lob Costing
1.2 Batch Costing
2 Uses oflob & Batch Costing
3 Benefits of Internal lob Costing
4 Accounting for Jobs & Batches
4.1 Iournal Entries
4.2 Ledger Entries
5 Calculating Iob 81 Batch Costs
6.1 Question (12/06, Q31) i
n
Exam Topic10: PROCESS COSTING SYSTEM
Exam Topic 10:
PROCESS COSTING SYSTEM

Sub Exam To ics
6©O \lO\lU1-l>-OQ|0H Prime Cost & Conversion Cost 11
Process Costin 11
Normal & Abnormal Losses or Gains 17
Ste s Involved in Process Costin
Pre arin Process Accounts
Process Costin Involvin Wor 'n Proce
B Products & Joint Produc
Allocatin Costs to Joint
Accountin for Joint P ucts
Practice estions 'ons
Exam To ic Awarene
Anal sis
Corn osition
Im rtance
n
Exam Topic10: PROCESS COSTING SYSTEM
1 Prime Cost & Conversion Cost

1.1 Prime Cost
1.2 Conversion Cost
2 Process Costing
3 Normal & Abnormal Losses or Gains
4 Steps Involved in Process Costing
4.1 Calculate Cost per Unit of Process Output
4.2 Allocating Cost between Actual Output & A 0 rmal L55
5 Preparing Process Accounts
5.1 Equivalent Cost Units
6.2.1
6.2.2 Calculating Equival
Equi . nt‘Cost
Cost Uniti;
U‘ 'ts losing'
rage Method
/06, Q29: P/P, Q42)

2/06, Q50: P/P, Q21):
(12/06, Q39: P/P, Q35):
Buy Full AL'SA FZ/FMA Study Text Bunk (ASfli) at AEEASUPPDRTDDM | SHARE | EDMMENT | FDRLIMS | JDBS
B
Exam Topic11: SERVICE COSTING SYSTEM
Exam Topic 11:
SERVICE COSTING SYSTEM

Sub Exam Topics
S.no Headings (click the cross—ref below for easy a; . tion) Pg.no
1 Applications of Service Costing System 119
2 Unit Costs for Services Industry 119
3 Analyze Service Costs \
Analysis
Composition
Importance
n
Exam Topic11: SERVICE COSTING SYSTEM
1 Applications of Service Costing System

2 Unit Costs for Services Industry
3 Analyze Service Costs
4 .1 Question (12/06, Q24) i
n
Exam Topic12: ALTERNATIVE COST ACCOUNTING
Exam Topic 12:
ALTERNATIVE COST ACCOUNTING

Sub Exam Topics
S.no Headings (click the cross—ref below for easy
1 Activity Based Costing (ABC)
@CJ'l-bODIO Life Cycle Costing
Target Costing
Total Quality Management (TQM)
Traditional Vs Modern Costing Te n
Analysis I
Composition I
Importance I
n
Exam Topic12: ALTERNATIVE COST ACCOUNTING
1 Activity Based Costing (ABC)

2 Life Cycle Costing
2.1.1 Design or Development
2.1.2 Introduction
2.1.3 Growth
2.1.4 Maturity
2.1.5 Decline
3 Target Costing
4 Total Quality Management (TQM)
5 Traditional Vs Modern Costing Te
5.1 Traditional Costing Techniques
5.2 Modern Costing Techniques
6 Practice Questions & Solu '
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at ADEASIIPPDRTIIDM | SHARE | [IDMMENT | FDRLIMS | JDBS
n
Exam Topic14: STATISTICAL TECHNIQUES
Exam Topic 13:
NATURE 8: PURPOSE OF BUDGETING

Sub Exam Topics
1 Budgeting
GUI-ROOM Uses of Budgeting
Planning & Control Cycle
Administrative Procedures of Budge '
Stages in the Budgeting Process
Analysis I
Composition I
Importance I
Buy Full ADDA FZ/FMA Study Text Bunk (liflfli) at ADEASDPPDRTDDM | SHARE | [IDMMENT | FDRDMS | JDBS
n
UJNH Budgeting
Uses of Budgeting
Planning 8: Control Cycle
4 Administrative Procedures of Budgeting
4. 1 Budget Period
4. 2 Budget Policy Manual
4. 3 Delegation of Responsibilities
4. 4 Establishment of Budget Committee
5 Stages in the Budgeting Process
6 Practice Questions 8: Solutions
6. 1 Question (P/P, Q9):
6. 2 Question (12/06, Q15) a
n
Exam Topic 14:
STATISTICAL TECHNIQUES
Sub Exam To ics
H I-li-l
I—l
Forecastin 12
cIQNHO©Ofi>\lQ‘\lZJ1-I>OCJN) Forecastin Techni ues 12
Forecastin Usin Hi h Low Method 25
Scatter Gra h Dia s & Line of B
Coefficient of Correlation
Re ession Anal sis
Calculatin Re ession Line
Ad'ustment for Inflation
Advanta es & Disad es of Re 'on Line
Product Life cle tin
Time Series Ana
Movin Avera
Seasonal Variations
j-t
.1; Advanta ' advanta
j-i U‘l
Index
j-i
O“\ Calc bers
H S heet
j-i 00
estl 'o
Ex e
.rlysis Details
,mpogition
Im rtfice I
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at ADEASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
B
Exam Topio14: STATISTICAL TECHNIQUES
1 Forecasting
1.1 Interpolation
1.2 Extrapolation
2 Forecasting Techniques
2.1 Reliability of Forecast
3 Forecasting Using High Low Method
3.1 Advantages & Disadvantages of High-Low Met
4 Scatter Graph Diagrams & Line of Best
5 Coefficient of Correlation
5.1 Calculating co-efficient of correlation
5.2 Coefficient of Determination
5.3 Calculating Coefficient of Deter '
6 Regression Analysis
7 Calculating Regression
7.1 Assumptions of Regres
13.2 M iplicative Model

13.2.1 Assumption
13.3 Deseasonalisation
14 Advantages & Disadvantages of Time Series Analysis
15 Index Numbers
Buy Full ABBA FZ/FMA Study Text Beck (4801) at AL'EASIIPPDRTBDM | SHARE | EDMMENT | FI]RI.IMS | JDBS
16 Calculating Index Numbers

16.1 Simple Aggregate Index Numbers
16.2 Fixed & Chain Based Index Number
17 Spread Sheet
17.1 Features of Spread Sheet
17.2 Roles of Spread Sheet
18.2 Question (12/06, Q7: P/P, Q13)
18.3 Question (12/06, Q14)
18.5 Question (12/06, Q3)
18.7 Question (12/06, Q22: P/P )
Buy Full AEEA FZ/FMA Study Text Bunk (ABUi) at ADDASLIPPDRTEDM | SHARE | DDMMENT | FDRLlMS | JDBS
n
Exam Topic15: BUDGET PREPARATION
Exam Topic 15:
BUDGET PREPARATION
Sub Exam Topics
S.no Headings (click the cross—ref below for easy :1 .tion) Pg.no
1 Importance of Principle Budget Factor 128
2 Sales Budget
3 Functional Budgets
4 Cash Budgets
5 Master Budgets
6 What if Analysis 8: Scenario Pl ~ ing
7 Practice Questions & Solutio '
Analysis De 5
Composition
Importance
fl
Exam Topic15: BUDGET PREPARATION
1 Importance of Principle Budget Factor

2 Sales Budget
3 Functional Budgets
3.1 Production Budget
3.1.1 Raw Materials Budget
3.1.2 Direct Labour Budget
3.1.3 Variable & Fixed Production Overhead Budge
4 Cash Budgets
5 Master Budgets
6 What if Analysis & Scenario Plan '
6.1 Scenario Planning
6.2 What IfAnalysis
7 Practice Questions & Solu '
7.1 Question (12/06, Q36: P/ Q19)
7.2 Question (12/06, Q18)
7.3 Question (12/06, Q
Buy Full AEDA FZ/FMA Study Text Bunk (liflfli) at ADEASLIPPDRTDDM | SHARE | [IDMMENT | FDRDMS | JDBS
n
Exam Topic16: FLEXIBLE BUDGETS
Exam Topic 16:
FLEXIBLE BUDGETS
Sub Exam Topics
.
S.no Headings (click the cross—ref below for easy a; .tlon)
1 Importance of Flexed Budgets
2 Disadvantages of Fixed budget
3 Uses of Fixed & Flexible Budgets \
4 Prepare Flexible Budget
Analysis \ etails
Composition
Importance
Buy Full AEEA FZ/FMA Study Text Bunk (ASHE) at ADEASIIPPDRTDDM | SHARE | EDMMENT | FDRLIMS | JDBS
ASSA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad Ei ASSA Distance Learning Tuitiun [luurses
n
Exam Topici6: FLEXIBLE BUDGETS
Cfl—PUJNH Importance of Flexed Budgets

Disadvantages of Fixed budget
Uses of Fixed 81 Flexible Budgets
Prepare Flexible Budget
5.2 Question (12/06, Q9: P/P, Q33):
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at AL'EASUPPURTIIIJM | SHARE | EUMMENT | FURIJMS | J|]BS
AREA F5, FEI, PI, P3 Study Materials Free Demo Download Ei ABBA Distance Learning Tuitiun Euurses
n
Exam Topic17: CAPITAL BUDGETING & DISCOUNTED CASH FLOWS
Exam Topic 17:
CAPITAL BUDGETING 8: DISCOUNTED

CASH FLOWS
Sub Exam To ics
S.no Headin (click the cross—ref below for navi a
1 Im rtance of Ca ital Investment in P1 &
Ca ital Vs Revenue enditure
Ca ital enditure Bud et
es of Interest & Interest Ra
Com oundin 8: Discountin
Profit Vs Cash Flow
Relevant Cash Flows fo vestment ision
Irrelevant Cash Flo ve ent Dec' ' n
9 Discounted Cash ' u
10 Annui & Pe
11 Practice estions &
Exam To ic Aw ess
Anal sis
Com ositi
Im rtance I
ADDA F5, FEI, Pl, P3 Study Materials Free Demo Duwnlnad E'r AEDA Distance Learning Tuitiun Duurses
B
Exam Topic17: CAPITAL BUDGETING & DISCOUNTED CASH FLOWS
1 Importance of Capital Investment in Planning & Control

2 Capital Vs Revenue Expenditure
3 Capital Expenditure Budget
3.1 Issues Involved in Capital Expenditure Budgeting
3.1.1 Inflation/Deflation
3.1.2 Liquidity
3.1.3 Cost of Capital
3.1.4 Opportunity Cost
3.1.5 Technological Change
3.1.6 Disposal Proceeds
3.1.7 Other Issues to Consider in Capital
3.2 Steps Involved in Preparing Capi
4 Types of Interest & Interes
4.1 Simple Vs Compound Inter
4.1.1 Simple Interest
4.1.2 Compoundlnterest
4.2 Nominal Vs RealI
4.3 Fisher Formula
ent Decision
8 ash Flows for Investment Decision

8.1 t or Past Cost
8.2
8.3
8.4 Non Controllable Cash Flows
8.5 Unavoidable Cash Flows
9 Discounted Cash Flow Techniques
9.1 Net Present Value (NPV)
Buy Full AL'DA FZ/FMA Study Text Bunk (llBni') at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials Free Demu Download 5 ABBA Distance Learning Tuitinn Duurses
B
Exam Topi017: CAPITAL BUDGETING & DISCOUNTED CASH FLOWS
9.1.1 Calculate Net Present Value [NPV)

9.2 Internal Rate ofReturn (IRR)
9.2.1 Calculate Internal Rate of Return (IRR)
9.3 Payback Period
9.3.1 Calculating Payback Period
10 Annuity & Perpetuity
10.1 Calculating Annuity Factor
10.2 Perpetuity
11.1 Question (12/02, Q3)
11.2 Question (12/06, Q40)
11.3 Question (12/06, Q42)
11.4 Question (12/06, Q43)
11.8 Question (P/P, Q48
Buy Full AEEA FZ/FMA Study Text Bunk (ASHE) at ADEASIIPPDRTDDM | SHARE | EDMMENT | FDRLIMS | JDBS
ASSA F5, FEI, Pl, P3 Study Materials Free Demu Duwnluad Ei ASSA Distance Learning Tuitiun [luurses
n
Exam Topi018: BUDGETARY CONTROL & REPORTING
Exam Topic 18:
BUDGETARY CONTROL & REPORTING

Sub Exam Topics
S.no Headings (click the cross—ref below for easy‘ » .tion) Pg.no
1 Variance b/w Fixed, Flexed Budget & Actual
GUI-50 k? Relative Significance of Variances
Potential Actions
Responsibility Accounting & Contro
Controllable Vs Non Controllable
Prepare Control Reports
Analysis I
Composition I
Importance I
Buy Full AEEA FZ/FMA Study Text Bunk (liflfli) at ADDASLIPPDRTBDM | SHARE | [lDMMENT | FDRLIMS | JDBS
ADEA F5, FEI, Pl, P3 Study Materials Free Demo Download Ei ABBA Distance Learning Tuitiun [luurses
n
Exam Topic18: BUDGETARY CONTROL & REPORTING
Chm-PUJNH Variance b/w Fixed, Flexed Budget 8: Actual

Relative Significance of Variances
Potential Actions
Responsibility Accounting 8: Control
Controllable Vs Non Controllable Costs
Prepare Control Reports
as
AREA F5, FEI, Pl, P3 Study Materials Free Demo Duwnlnad E'r ADDA Distance Learning Tuitiun [luurses
n
Exam Topic19: BEHAVIOURAL ASPECTS OF BUDGETING
Exam Topic 19:
BEHAVIOURAL ASPECTS OF
BUDGETING
Sub Exam Topics
S.no Headings (click the cross—ref below for e . naviga - Pg.no
1 Importance of Motivation in Performa ' “ 4 anag \ ent
2 Budgetary Planning & Control Syste '
3 Impact of Targets on Motivation
4 Managerial Incentive Schemes
5 Approaches to Budget Settin
6 Advantages & Disadvanta; -
Budgeting
7 Top down Vs Botto
Exam Topic Aware ss
Analysis
Composition
Importance
B
Exam Topi019: BEHAVIOURAL ASPECTS OF BUDGETING
1 Importance of Motivation in Performance Management

2 Budgetary Planning & Control System
3 Impact of Targets on Motivation
4 Managerial Incentive Schemes
4.1 Salary
4.2 Bonus
4.3 Shares
4.4 Share Options
4.5 Pension
4.6 Benefits
5 Approaches to Budget Setting P ocess
6 Advantages & Disadvantage ' '
Budgeting
7 Top down Vs Bottom u
8 Practice Questions
8.1 Question (P/P, Q50
8.2 Question (P/P, Q1 )
Buy Full AEHA FZ/FMA Study Text Sunk (ASHE) at ADHASIIPPDRTHHM | SHARE | HHMMENT | FDRHMS | JHBS
n
Exam Topic 20: STANDARD COSTING SYSTEMS
Exam Topic 20:
STANDARD COSTING SYSTEMS

Sub Exam Topics
1 Standard Costing 139
2 Standard Vs Marginal Vs Absorption Cost'
3 Implementing Standard Costing
Analysis I I!“
Compgition I —
Importance I
Q
n
Exam Topic 20: STANDARD COSTING SYSTEMS
1 Standard Costing
1.1 Definition of Standard Cost 8: Budgeted Cost
1.2 Purpose of Standard Costing
1.3 Principles of Standard Costing
2 Standard Vs Marginal Vs Absorption Costing
2.1 Standard Cost Card
2.2 Actual Data
3 Implementing Standard Costing
n
Exam Topic 21: VARIANCE ANALYSIS
Exam Topic 21:
VARIANCE ANALYSIS
Sub Exam To ics
S.no Headin s (click the cross—ref below for ea
O6©00\1
‘Wlfl-BOQNH Total Sales Variance
Total Material Cost Variance
Total Labour Cost Variance
Total Variable Production Overhead
Total Fixed Production Overhead
Inte retin Variances
Investi atin Variances
Interrelationshi betwee
Calculatin Standard 0 ctual Cost
Practice estions 'ons
Exam To ic Awarene
Anal sis
Corn osition
Im rtance
B
Exam Topic 21: VARIANCE ANALYSIS
1 Total Sales Variance

1.1 Sales Price Variance
1.2 Sales Volume Profit or Contribution Variance
2 Total Material Cost Variance
2.1 Material Price Variance
2.2 Material Usage Variance
3 Total Labour Cost Variance
3.1 Labour Rate Variance
3.2 Labour Efficiency Variance
3.3 Idle Time Variance
6 Interpreting "a 'ances

7 Investiga' ng Varia ces
7.1 Reaso or
8 Inte'rela 'ons 'p be ween Va ian
9 i culating "tan 1 a or Ac. a 05
1 ract e Quest ' ‘ i Solutions
estio . \
. c tion
10. Ques n (P/
10.4 ‘ estion (12/0
.5! tion (12/06, 0
~ue n(12/06, a ,P/P, Q34)
estion (P/P, Q2 )
tion (12/06, Q20)
P P, Q25)
10. . (P/P, Q45)
10.11 5 on (12 /06, Q41)
Buy Full AL'HA FZ/FMA Study Text Bunk (ASHE) at AEHASIIPPDRTHHM | SHARE | HHMMENT | FDRHMS | JHBS
AHSA F5, FEI, Pl, PS Study Materials Free Demu Duwnluad S ASHA Distance Learning Tuitiun Suurses
B
Exam Topic 22: RECONCILIATION OF BUDGETED & ACTUAL PROFIT
Exam Topic 22:
RECONCILIATION OF BUDGETED &

ACTUAL PROFIT
Sub Exam Topics
S.no Headings (click the cross—ref below for e
1 Under Absorption Costing
2 Under Marginal Costing
Analysis
Composition
Importance
n
Exam Topic 22: RECONCILIATION OF BUDGETED & ACTUAL PROFIT
1 Under Absorption Costing

2 Under Marginal Costing
3 Practice Questions 8: Solutions
315$)
n
Exam Topic 23: PERFORMANCE MEASUREMENT OVERVIEW
Exam Topic 23:
PERFORMANCE MEASUREMENT
OVERVIEW
Sub Exam Topics
S.no Headings (click the cross—ref below for e . naviga u
1 Mission Statement
2 Objectives _
3 Macro Economics & Performance l - .
4 Government Regulation & Perfo mance 7“
5 Practice Questions & Solutio v
Exam Topic Awareness i
Analysis I De . s
Composition I
Importance I
Buy Full AEDA FZ/FMA Study Text Bunk (48|]i) at ADDASLIPPDRTDDM | SHARE I [IDMMENT | FDRIIMS I JDBS
n
Exam Topic 23: PERFORMANCE MEASUREMENT OVERVIEW
1 Mission Statement
1.1 Purpose of Mission Statement
1.2 Role of Mission Statement in Performance Measurement
2 Objectives
2.1 Purpose of Objectives
2.1.1 Strategic Objectives
2.1.2 Tactical Objectives
2.1.3 Operational Objectives
2.2 Role of Objectives in Performance Measu
2.2.1 Strategic Objectives
2.2.2 Tactical Objectives
2.2.3 Operational Objectives
3 Macro Economics & Perfor
4 Government Regulation
5 Practice Questions &
Buy Full AEHA FZ/FMA Study Text Sunk (ASHE) at ADHASIIPPDRTHHM | SHARE | HHMMENT | FDRHMS | JHBS
n
Exam Topic 24: PERFORMANCE MEASUREMENT-APPLICATION
Exam Topic 24:
PERFORMANCE MEASUREMENT -
APPLICATION
Sub Exam To ics
S.no Headin s (click the cross—ref below for navi a
:6\O O\TU\Ul-l>O Ni-‘ Ratios for Financial Performance Meas cut
Non Financial Performance Me
Balance Score Card
Benefits & Limitations of Balan Score
Critical Success Factors & K rmanc
Value for Mone
Divisional Performanc easures
Advanta es & Disad es of th ROC RI
Characteristics of
Performance M
Inte retation of Perfo
12 Practice ' ns & Solu
Exam To ic
Anal sis
Com osi
Im anc
Buy Full AL'DA FZ/FMA Study Text Bunk (liflfli) at ADDASLIPPDRTEDM | SHARE | DDMMENT | FDRLlMS | JDBS
B
1 Ratios for Financial Performance Measurement

1.1 Profitability ratios
1.1.1 Gross Profit Margin
1.1.2 Net/Operating Profit Margin
1.1.3 Cost of Sales Percentage
1.1.4 Operating Cost Percentage
1.1.5 Sales Growth or Decline Percentage
1.2 Working Capital or Liquidity Ratios
1.2.1 Trade Receivable Turnover
1.2.2 Inventory Turnover
1.2.3 Trade Payable Turnover
1.2.4 Current Asset Ratio
1.2.5 Quick Ratio or Acid Test Rati
1.3 Gearing Ratios
1.3.1 Financial Gearing Ratio
1.3.1.1 Debt to Debt plus E
1.3.2 Operational Geari
1.3.2.1 Contribution to rofi
1.3.3 Interest Cover (Times)
1.4 Investor Ra '
‘I ividends
Di 'dend “r
5.2 -, erformance Indicators (KPI)

5.3 Relationships between Mission, Objectives, CSF 8: KPI
5.3.1 Mission
5.3.2 Objectives
5.3.3 Strategy
Buy Full AEDA FZ/FMA Study Text Bunk (48|]i) at ADDASLIPPDRTEDM | SHARE | DDMMENT | FDRLIMS | JDBS
AREA F5, FEI, Pl, P3 Study Materials Free Demu Duwnlnad S ADDA Distance Learning Tuitiun [luurses
n
5.3.4 CSF
5.3.5 KPI
5.4 Organization Specific CSF & KPI
6 Value for Money
6.1 Economy
6.2 Efficiency
6.3 Effectiveness
6.4 Performance Indicators
6.4.1 Economy
6.4.2 Efficiency
6.4.3 Effectiveness
6.5 Efficiency, Capacity&Activity Ra '
6.5.1 Efficiency Ratio
6.5.1.1 Limitation ofEfficiency R
6.5.2 Capacity Ratio
6.5.3 Activity Ratio
6.5.4 Calculate Eff‘ 'ency, .city
7 Divisional Performan a Measu
7.1 Return on Capital Employe~.
7.2 Calculatin ’ \ ROI
7.3 Return a )
7.4 Calcu ing '\
7.5 Re com
7.6 '. ‘
8 .‘ dva tages & > ' vantages of o h ROCE & RI
racte istics ‘ 'ces
9. . abili
9.2 Hetergeneit
9.3 \ angibility
4 ‘ taneity
A '. sfer ofOw ship
10 Pe ‘ ormance Measures for Service Industries
1 Interp. etation of Performance Measures
1 ractice 4 estions & Solutions
12.1 \ (P/P, Q14)
12.2 Qu on (P/P, Q41)
12.3 Q stion (P/P, Q11)
Buy Full AL'EA FZ/FMA Study Text Bunk (liSfli) at AEEASUPPURTIIIJM | SHARE | EUMMENT | FDRLIMS | JDBS
AREA F5, FEI, Pl, PS Study Materials Free Demu [luwnlnad Ei ABBA Distance Learning Tuitinn [inurses
B
Exam Topic 25: COST REDUCTIONS & VALUE ENHANCEMENT
Exam Topic 25:
COST REDUCTIONS & VALUE

ENHANCEMENT
Sub Exam Topics
S.no Headings (click the cross—ref below for e
1 Cost Reduction & Value Enhancement
2 Cost Reduction Methods
3 Value Analysis
4 Practice Question & Solutions
Analysis
Composition
Importance
Buy Full AEHA FZ/FMA Study Text Sunk (ASHE) at ASHASIIPPDRTHHM | SHARE | HHMMENT | FDRHMS | JHBS
n
Exam Topic 25: COST REDUCTIONS & VALUE ENHANCEMENT
1 Cost Reduction & Value Enhancement

1.1 Cost Control Vs Cost Reduction
2 Cost Reduction Methods
2.1 Methods ofCost Reduction
2.1.1 Spending
2.1.2 Efficiency
2.2 Ways ofCost Reduction
2.2.1 Variable Costs
2.2.2 Fixed Costs
2.2.3 Discretionary Costs
2.2.4 IIT
2.2.5 TQM
2.2.6 Target Costing
2.2.7 Value Analysis
2.2.8 Market Research
2.2.9 Outsourcing
2.2.10 Automation
2.2.11 Training
2.2.12 Communication
2.2.13 Wo ‘ a‘ '
2.2.14 urces of ance
2.2.15 Iax nning
n
Exam Topic 26: MONITORING PERFORMANCE & REPORTING
Exam Topic 26:
MONITORING PERFORMANCE 8:
REPORTING
Sub Exam Topics
S.no Headings (click the cross—ref below for e . naviga . Pg.no
1 Non Financial Performance Measures
2 Short & Long Term Performance
3 Performance Measurement in Se ' - .
4 Performance Measurement in n Profi
Organizations
5 Benchmarking
6 Types of Benchmarkin;
7 Performance Measur 152
Exam Topic Aware ss
Analysis
Composition
Importance
Buy Full AREA FZ/FMA Study Text Bunk (48|]i) at ADDASLIPPDRTEDM | SHARE | [IDMMENT | FDRLIMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials “wan Distance Learning Tuitiun Enurses
Exam Topic 26: MONITORING PERFORMANCE & REPORTING
1 Non Financial Performance Measures

2 Short & Long Term Performance
3 Performance Measurement in Service Industries
3.1 Standards
3.1.1 Equity
3.1.2 Ownership
3.1.3 Achievable
3.2 Rewards
3.2.1 Motivation
3.2.2 Clear
3.2.3 Controllability
3.3 Dimensions
3.3.1 Determinants
3.3.1.1 Quality of Service
3.3.1.2 Flexibility
3.3.1.3 Innovation
3.3.1.4 Resource Utiliza '
3.3.2 Results
3.3.2.1 Financial Performance
I E’ PIIIOIIIC
ce Measurement
nce Me urement Reports

ice Questions & Solutions
n (P P, Q1)
Buy Full AIIEA FZ/FMA Study Text Bunk (ASfli) at AIJEASLIPPIJRTEIJM | SHARE | [IIJMMENT | FDRLIMS | JIJBS
AEEA F5, F5, PI, P3 Study Materials “wan Distance Learning Tuitiun Enurses
This Material is NOTAvaiIabIe OFFLINE OR ONLINE except ACCASUPPORTCOM & CLICKBANKCOM
RELATED PRODUCTS
Books Free Demo
Management Accounting
Performance Management
Financial Management
Governance, Risk & Ethics
Business Analysis
Ebusiness/Ecommerce/ Make Money Online
Click the hyperlinks above in underlinedfityi
at http : // accasupportcom
Buy Full ASHA F2/FMA Study Text Bunk (ASHE) at AIIHASLIPPHRTBHM | SHARE | [IHMMENT | FDRHMS | JHBS
AHEA F5, FEI, Pl. PS Study Materials Free Demo Duwnluad S ADHA Distance Learning Tuitiun [luurses
m
This Material is Not Available Offline & Online in Any Form Except ACCASUPPORTCOM & CLICKBANKCOM
REPORT ABUSE
Please inform me at kabuli 52@hotmail.com (preferred) or
murtaza@accasupport.com, if you find any misuse of this study material
or www.accasupport.com. In addition, if you findy'nformation in this
study material or website that is awkward, unethic other than normal
etc from your viewpoint. \
This study material is not available at any 0 her we ite o\er the int net
except clickbankcom. In addition, this s y materia 's not availabl in
the form of printed books, DVDs etc.I \
\ ‘ I
Website hacking is very common ver the internet. Hackers modify,

delete and add contents on the geted wflres by gaining
unauthorized access to webs er, wh e the webpages are stored.
Reporting abuse will saye other visi rs to the website‘from g

victimized. Please help me discouragl gJthewti—social el ents.
I will keep confi »- ‘ ' - any corresponding between us.
ext
ACCA Class .
Buy Full ADDA FZ/FMA Study Text Buck (ABUi) at ADDASLIPPDRTDDM | SHARE | [IDMMENT | FDRUMS | JDBS
ADDA F5, F5, Pl, P3 Study Materials “wan Distance Learning Tuitiun Enurses

Acca f2 Fma Study Text PDF Full View Dow

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Acca f2 Fma Study Text PDF Full View Dow

Uploaded by

Copyright:

Available Formats

ACCA F2 Management Accounting Study Text Ebook for June 2013 Exam | Page 1 of 154

ACCA 52 EBOOK JUNE 2m 3

EXAM TOPICS ................................................................. ..

: COST CL ICATION & BEHAVIOUR ....................................... ..64

Exam Topic 11: SERVICE COSTING SYSTEM ........................................................ .. 118

Exam Topic 15:

Exam Topic 17:

Exam Topic 18:

Exam Topic 19:

Exam Topic 20:

Exam Topic 21:

Exam Topic 22:

Exam Topic 23:

Exam Topic 24'

‘Kccasupportcom link at any ONE of your E 2| lill or

A Blanket Rate 0 - Factory Wide

Absorption Costing .................. .. 106 118

Accurate .................................... .. 41 ___.I _ _ I _ . _ _ _ _ __

Achievable ............................... .. 147

Acid Test Ratio ......................... ..

Activity Based Costing (ABC)

Additive Model ...................... ..

.................. .. 104, 143

gets ............................ ..123

m Based Index Number ...... ..121

Clear ......................................... ..147

Clustered Sampling .................... ..55

Coefficient of Correlation ......... ..120

Coefficient of Determination .... .. 120

Committed Cost ....................... ..127

Competitive Benchmarking ...... ..147

Competitive Performance ........ ..147

Benchmarking ----------------------- "147 Complete .................................... ..41

Compound Interest .................. ..127

Compounding .......................... .. 127 Departmental Overhead Absorption

Controllability .......................... .. 147

Controllable Cash Flows ........... ..127

Conversion Cost ....................... .. 1

Cost Centres ....................... ..

ounted Cash Flow ...... .. 126, 127

Discounting .............................. ..127

Discretionary Costs .................. .. 145

Dispatch Note ............................ ..98

Distribution ................................ ..51

Dividend Cover ......................... ..142

Easy to use. ................................ ..41

Effective Interest Rate ............. .. 127 Flexibility .................................. ..147

Effectiveness ............................ .. 143 Forecasting ............................... .. 120

Efficiency ................................. .. 143 Free Inventory ............................ ..98

Efficiency Ratio ................ .. 104, 143 Frequency .............. ..50

Equity ....................................... .. 147 147

Equivalent Cost Units ............... ..112 .......... ..

Esteem Value ........................... .. 145 ............... ..

Exchange Value ........................ .. 1

us Schemes ............. ..103

Heterogeneity .......................... ..143

High Low Method ....................... ..73

Holding Cost ............................. ..100

Hourly Rate Basis ..................... .. 103

Idle Time Costs ......................... ..103

Fixed .Productlon Overhead Index Numbers ......................... ..120

Indirect Cost .............................. .. 62

Information ................................ ..40

rgin ............................... ..lOO

Ownership _____________________________ 147 Profit Centres ............................. ..79