UNIVERSITY OF EMBU

Department of Business and Economics

COURSE OUTLINE

BAC 205/AEB 403: PRINCIPLES OF MANAGEMENT ACCOUNTING

Purpose of the Course

This course equips the learner with professional skills needed in the preparation and presentation
of accounting information in a way to assist management in the formulation of policies, planning
and decision making.

Expected Learning Outcomes

By the end of the course, the learner should be able to:
1. Understand best ways of managing organizational resources
2. Classify the different costs in organizations;
3. Determine profit using marginal costing and absorption costing;
4. Analyze and plan for profits using break-even technique;
5. Appraise costs using the process method and job order costing; and,
6. Understand the various types of budgets for control purposes.

COURSE CONTENT:
Management Accounting; Information that creates value; Cost management concepts and cost
behavior; Production cost systems; Product costing systems; Product costing methods; Analyzing
cost-volume-profit Relationships; Relevant cost information for activity and process decisions;
Using budgets to achieve organizational objectives and flexible budgets; Standards and variance
analysis.

Course Delivery Schedule

1 Introduction to management accounting
 Nature and purpose of management Accounting
 Feature and management accounting
 Importance/functions of management accounting
 Relationship of management accounting with other disciplines
2 Cost management concepts and classification
 Cost concepts
 Cost classification
 Cost behaviour
3 Production Cost Techniques
- Absorption Costing
- Marginal Costing
4 Product costing systems:
 Job costing
  Process costing
5 Cat 1
6 Costing methods
 Job costing
 Process costing
 Service costing
7 CVP Analysis
 Break-even point
 Contribution margin
 Margin of safety
 Application of CVP analysis
8 Relevant cost information for Activity and process decisions
9 Budgets and budgetary control
 Features of a budget
 Types of budgets
 Budgetary control

10 Cat 2
11 Standards and variance analysis
 Meaning and usefulness of standard costing
 Types of standards
 Types of variances

12 Revision

Mode of Delivery
The course will be conducted using lectures, case studies, group presentations.

Instructional Materials and/or Equipment

Audio-visuals devices, computers/internet services, journals, newspapers, pens and white boards,
smart boards, flip charts and learning centers
Course Assessment
Continuous Assessments Tests 30%
Final Examination 70%
Total 100%

Core Reading Materials for the Course

1. Horngren, C. T.(2012).Cost Accounting : Student Practice and Solutions Guide. 13thPrentice
Hall, Inc.
2. Saleemi. N. A. (2013). Cost Accounting Simplified. Saleem Publications Ltd, Nairobi –
Kenya.
3. Colin D. (2012). Management and cost accounting. Colin Drury- China.

Recommended Reference Materials

1. Lucy, T ( 2002). Costing. (6th ed). Continuum,  Aldyne: DP Publications. 
3. Schaefer.G., & Timothy S. D. (2001). Advanced accounting (6th ed.). New York: Mc Graw-
Hill.
4. Storey, P (2002), Introduction to Cost and Management Accounting, NY: Palgrave Macmillan.