GREAT COLLEGE

Managerial Economics course outline

CHAPTER ONE: INTRODUCTION TO MANAGERIAL ECONOMICS

1.1. Definitions, Managerial issues and decision making

1.2. Scope of managerial economics
1.3. The nature of the firm
1.4. Goals and constraints
1.5. The circular flow of economic activity
1.6. The concept of profits

CHAPTER TWO: FUNDAMENTAL ECONOMIC CONCEPTS

2.1. Equilibrium analysis

 Supply and demand relationships

2.2. Marginal analysis

 The time value of money

CHAPTER THREE: OPTIMIZATION TECHINQUES

3.1. Introduction

3.2. Types of optimization techniques

3.3. Differential calculus and optimization

 Application of differential calculus to optimization problems

 Partial differentiation and multivariate optimization
 Constrained optimization/langrage multiplier technique

CHAPTER FOUR: DEMAND AND SUPPLY FORCASTING

4.1. Introduction

4.2. Analysis of market demand

4.3. Demand function

4.4. Elasticity of demand and its application

4.5. Demand forecasting

 Qualitative forecasting
 Quantitative forecasting
CHAPTER FOUR: DECISION MAKING UNDER RISK AND UNCERTIANITY

5.1. The nature of decision making

5.2. Meaning and measurements of risks

 The meaning of risk

 Risk and probability distributions
 Risk and expected values of an investment

5.3. Approaches of incorporating risk into decision making process

5.4. Decision making under uncertainty

CHAPTER SIX: PRODUCTION AND COST ANALYSIS

6.1. Theory of production

6.2. Theory of cost

6.3. Economies and diseconomies of scale

6.4. Economies of scope

CHAPTER SEVEN: PRICING STRATEGIES AND PRACTICES

7.1. Introduction

7.2. Pricing strategies

REFERENCES

Petrson and Lewis, Managerial Economics, Pearson Education Plc, 1999

Chrystal and Lipsey, Economics for Business and Management, Oxford University Press, 1997.

Graham Pearson , Managerial Economics ,Addison Wesley Publishing Company, 1980.

Maurice et al., Managerial Economics and Business Strategy. McGraw Hill Primis, 2002.

EVALUATION

Techniques of evaluation Weight

Test (1 and 2) 20% (10% each)
Quize 5%
Assignment(both individual and group) 25%
Final Exam 50%
Total 100%

What Is Management Accounting?

 1. Hub
2. Accounting
3. What Is Management Accounting?

The process of creating organization goals by identifying, measuring, analyzing, interpreting

and communicating information to managers is call management or managerial accounting.

Management accounting focuses on all accounting aimed at informing management about

operational business metrics. It uses information relating to costs of products or services
purchased by the company. Budgets are often used to quantify the decisions made in
operational planning. Management accountants use performance reports to note variances
between actual results from budgets.

The main difference between management accounting and financial accounting is financial
accounting is the collection of accounting data to create financial statements, while
management accounting is the internal processing used to account for business transactions.

This article will also discuss:

What Is Management Accounting and Its Functions?

What Is a Management Accounting System?

What Is the Role of Management Accounting?

NOTE: FreshBooks Support team members are not certified income tax or accounting
professionals and cannot provide advice in these areas, outside of supporting questions
about FreshBooks. If you need income tax advice please contact an accountant in your
area.

What Is Management Accounting and Its Functions?

Management accounting is the process of preparing reports about business operations that
help managers make short-term and long-term decisions. It helps a business pursue its goals
by identifying, measuring, analyzing, interpreting and communicating information to
managers. The main functions of management accounting include:

1.  Helping Forecast the Future

Forecasting helps decision to made and answers questions like: Should a company invest
more in equipment? Should it diversify into different markets and regions? Should it buy
another company?

Management accounting helps answer important questions that can forecast future trends in
business.
2.  Helping in Make-or-buy Decisions

Management accounting insights on cost and production availability are deciding factors in
purchasing choices. Data from managerial accounting empower decision-making at both an
operational and strategic level.

3.  Forecasting Cash Flows

Estimating cash flows and the impact of cash flows on the business is essential. Considering
where the costs companies will incur in the future and where its revenue will come from can
help a business make its next moves. Management accounting involves creating budgets and
trend chars that manager use to decide how to allocate money and resources to generate the
projected revenue growth.

4.  Helping Understand Performance Variances

Performance discrepancies in business are variances between what was predicted and what
was achieved. Using analytical techniques, management accounting help management build
on positive variances and manager the negative ones.

5.  Analyzing the Rate of Return

Knowing the rate of return (ROR) is essential to know before embarking on a project that
requires a lot of investments. Vital questions that can be answered through management
accounting include. If presented with two investment opportunities, how does a business
choose the most profitable one? In how many years will a company break even on a project?
What are the cash flows estimated to be?

What Is a Management Accounting System?

Internal management accounting systems are used to provide critical information to
management to be used in operational business decision-making. A manufacturing company
might use these systems to help in the costing and managing of their process. A hospital
might use management accounting systems to assist them in insurance billing and other in-
house requirements.

These systems vary within the industries they are used within and allow for functionalities
and reports specific to that industry.

What Is the Role of Management Accounting?

Management accounting helps managers within a company make decisions.

Also known as cost accounting, management accounting is the process of identifying,

analyzing, interpreting and communicating information to managers to help achieve business
goals.
The data collected encompasses all fields of accounting that informs the management of
business operations relating to the costs of products or services purchased by the company.
Management accountants use budgets to quantify the business’ plan of operations.

Performance reports are used to note the deviation of actual results compared what was
budgeted.

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