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CIMA Subject BA2 Fundamentals of Management Accounting Study Text CIMA Certificate in Business Accounting
Published by: Kaplan Publishing UK
Unit 2 The Business Centre, Molly Millars Lane, Wokingham, Berkshire RG41 2QZ
Copyright © 2016 Kaplan Financial Limited. All rights reserved.
No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise without the prior written permission of the publisher.
Acknowledgements
The CIMA Publishing trade mark is reproduced with kind permission of CIMA.
Notice
The text in this material and any others made available by any Kaplan Group company does not amount to advice on a particular matter and should not be taken as such. No reliance should be placed on the content as the basis for any investment or other decision or in connection with any advice given to third parties. Please consult your appropriate professional adviser as necessary. Kaplan Publishing Limited and all other Kaplan group companies expressly disclaim all liability to any person in respect of any losses or other claims, whether direct, indirect, incidental, consequential or otherwise arising in relation to the use of such materials.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library.
ISBN: 9781784157579
Printed and bound in Great Britain.
ii
Contents
Page
Chapter 1 The context of management accounting 1
Chapter 2 Cost identification and classification 39
Chapter 3 Analysing and predicting costs 75
Chapter 4 Overhead analysis 113
Chapter 5 Marginal and absorption costing 157
Chapter 6 Budgeting 197
Chapter 7 Standard costing and variance analysis 257
Chapter 8 Integrated accounting systems 309
Chapter 9 Performance measurement 359
Chapter 10 Preparing accounts and reports for management 401
Chapter 11 Risk 1 – Summarising and analysing data 447
Chapter 12 Risk 2 – Probability 507
Chapter 13 Shortterm decision making 563
Chapter 14 Longterm decision making 617
Chapter 15 Mock Assessment 673
iii
iv
Introduction
v
chapterintroduction
How to Use the Materials
These Kaplan Publishing learning materials have been carefully designed to make your learning experience as easy as possible and to give you the best chances of success in your CIMA Cert BA Objective Test Examination.
The product range contains a number of features to help you in the study process. They include:
This Study Text has been designed with the needs of homestudy and distance learning candidates in mind. Such students require very full coverage of the syllabus topics, and also the facility to undertake extensive question practice. However, the Study Text is also ideal for fully taught courses.
The main body of the text is divided into a number of chapters, each of which is organised on the following pattern:
• a detailed explanation of all syllabus areas
• extensive ‘practical’ materials
• generous question practice, together with full solutions.
• Detailed learning outcomes. These describe the knowledge expected after your studies of the chapter are complete. You should assimilate these before beginning detailed work on the chapter, so that you can appreciate where your studies are leading.
• Stepbystep topic coverage. This is the heart of each chapter, containing detailed explanatory text supported where appropriate by worked examples and exercises. You should work carefully through this section, ensuring that you understand the material being explained and can tackle the examples and exercises successfully. Remember that in many cases knowledge is cumulative: if you fail to digest earlier material thoroughly, you may struggle to understand later chapters.
• Activities. Some chapters are illustrated by more practical elements, such as comments and questions designed to stimulate discussion.
• Question practice. The text contains examstyle objective test questions (OTQs).
• Solutions. Avoid the temptation merely to ‘audit’ the solutions provided. It is an illusion to think that this provides the same benefits as you would gain from a serious attempt of your own. However, if you are struggling to get started on a question you should read the introductory guidance provided at the beginning of the solution, where provided, and then make your own attempt before referring back to the full solution.
introduction
vivi
If you work conscientiously through this Official CIMA Study Text according to the guidelines above you will be giving yourself an excellent chance of success in your Objective Text Examination. Good luck with your studies!
Quality and accuracy are of the utmost importance to us so if you spot an error in any of our products, please send an email to [email protected] with full details, or follow the link to the feedback form in MyKaplan.
Our Quality Coordinator will work with our technical team to verify the error and take action to ensure it is corrected in future editions.
Icon Explanations
Definition – These sections explain important areas of knowledge which must be understood and reproduced in an assessment environment.
Key Point – Identifies topics which are key to success and are often examined.
Supplementary reading – These sections will help to provide a deeper understanding of core areas. The supplementary reading is NOT optional reading. It is vital to provide you with the breadth of knowledge you will need to address the wide range of topics within your syllabus that could feature in an assessment question. Reference to this text is vital when selfstudying.
Test Your Understanding – Following key points and definitions are exercises which give the opportunity to assess the understanding of these core areas.
Illustration – To help develop an understanding of particular topics. The illustrative examples are useful in preparing for the 'Test Your Understanding' exercises.
Exclamation Mark – This symbol signifies a topic which can be more difficult to understand, when reviewing these areas care should be taken.
Study technique
In this section we briefly outline some tips for effective study during the earlier stages of your approach to the Objective Text Examination. We also mention some techniques that you will find useful at the revision stage. Use of effective study and revision techniques can improve your chances of success in the CIMA Cert BA and CIMA Professional Qualification examinations.
vii
Planning
To begin with, formal planning is essential to get the best return from the time you spend studying. Estimate how much time in total you are going to need for each subject you are studying. Remember that you need to allow time for revision as well as for initial study of the material.
With your study material before you, decide which chapters you are going to study in each week, and which weeks you will devote to revision and final question practice.
Prepare a written schedule summarising the above and stick to it!
It is essential to know your syllabus. As your studies progress you will become more familiar with how long it takes to cover topics in sufficient depth. Your timetable may need to be adapted to allocate enough time for the whole syllabus.
Students are advised to refer to the notice of examinable legislation published regularly in CIMA’s magazine (Financial Management), the students enewsletter (Velocity) and on the CIMA website, to ensure they are uptodate.
Students are advised to consult the syllabus when allocating their study time. The percentage weighting shown against each syllabus topic is intended as a guide to the proportion of study time each topic requires.
Tips for effective studying
(1) Aim to find a quiet and undisturbed location for your study, and plan as far as possible to use the same period of time each day. Getting into a routine helps to avoid wasting time. Make sure that you have all the materials you need before you begin so as to minimise interruptions.
(2) Store all your materials in one place, so that you do not waste time searching for items every time you want to begin studying. If you have to pack everything away after each study period, keep your study materials in a box, or even a suitcase, which will not be disturbed until the next time.
(3) Limit distractions. To make the most effective use of your study periods you should be able to apply total concentration, so turn off all entertainment equipment, set your phones to message mode, and put up your ‘do not disturb’ sign.
introduction
viii
(4) Your timetable will tell you which topic to study. However, before diving in and becoming engrossed in the finer points, make sure you have an overall picture of all the areas that need to be covered by the end of that session. After an hour, allow yourself a short break and move away from your Study Text. With experience, you will learn to assess the pace you need to work at. Each study session should focus on component learning outcomes the basis for all questions.
(5) Work carefully through a chapter, making notes as you go. When you have covered a suitable amount of material, vary the pattern by attempting a practice question. When you have finished your attempt, make notes of any mistakes you made, or any areas that you failed to cover or covered more briefly. Be aware that all component learning outcomes are examinable.
(6) Make notes as you study, and discover the techniques that work best for you. Your notes may be in the form of lists, bullet points, diagrams, summaries, ‘mind maps’, or the written word, but remember that you will need to refer back to them at a later date, so they must be intelligible. If you are on a taught course, make sure you highlight any issues you would like to follow up with your lecturer.
(7) Organise your notes. Make sure that all your notes, calculations etc. can be effectively filed and easily retrieved later.
Objective Test
Objective Test questions require you to choose or provide a response to a question whose correct answer is predetermined.
The most common types of Objective Test question you will see are:
• multiple choice, where you have to choose the correct answer(s) from a list of possible answers – this could either be numbers or text
• multiple response with more choices and answers, for example, choosing two correct answers from a list of five available answers – this could either be numbers or text
• number entry, where you give your numeric answer to one or more parts of a question, for example, gross profit is $25,000 and the accrual for heat and light charges is $750
• drag and drop, where you match one or more items with others from the list available, for example, matching several accounting terms with the appropriate definition
• drop down, where you choose the correct answer from those available in a drop down menu, for example, choosing the correct calculation of an accounting ratio, or stating whether an individual statement is true or false
ix
CIMA has provided the following guidance relating to the format of questions and their marking:
Throughout this Study Text we have introduced these types of questions, but obviously we have had to label answers A, B, C etc rather than using click boxes. For convenience we have retained quite a few questions where an initial scenario leads to a number of subquestions. There will be questions of this type in the Objective Test Examination but they will rarely have more than three subquestions.
Guidance re CIMA onscreen calculator
As part of the CIMA Objective Test software, candidates are provided with a calculator. This calculator is onscreen and is available for the duration of the assessment. The calculator is available in Objective Test Examinations for BA1, BA2 and BA3 (it is not required for BA4).
Guidance regarding calculator use in the Objective Test Examinations is available online at: https://connect.cimaglobal.com/
• hot spot, where, for example, you use your computer cursor or mouse to identify the point of profit maximisation on a graph
• other types could be matching text with graphs and labelling/indicating areas on graphs or diagrams.
• questions which require narrative responses to be typed will not be used
• for number entry questions, a small range of answers will be accepted. Clear guidance will usually be given about the format in which the answer is required e.g. 'to the nearest $' or 'to two decimal places'.
• item set questions provide a scenario which then forms the basis of more than one question (usually 24 questions). These sets of questions would appear together in the test and are most likely to appear in BA2 and BA3
• all questions are independent so that, where questions are based on a common item set scenario, each question will be distinct and the answer to a later question will not be dependent upon answering an earlier question correctly
• all items are equally weighted and, where a question consists of more than one element, all elements must be answered correctly for the question to be marked correct.
introduction
x
CIMA Cert BA Objective Tests
The Objective Tests are a twohour assessment comprising compulsory questions, each with one or more parts. There will be no choice and all questions should be attempted. The number of questions in each assessment are as follows:
BA1 Fundamentals of Business Economics – 60 questions BA2 Fundamentals of Management Accounting – 60 questions BA3 Fundamentals of Financial Accounting – 60 questions BA4 Fundamentals of Ethics, Corporate Governance and Business Law – 85 questions
All questions are equally weighted. All parts of a question must be answered correctly for the question to be marked correct. Where questions are based upon a common scenario, each question will be independent, and answers to later questions will not be dependent upon answering earlier questions correctly.
Structure of subjects and learning outcomes
Each subject within the syllabus is divided into a number of broad syllabus topics. The topics contain one or more lead learning outcomes, related component learning outcomes and indicative knowledge content.
A learning outcome has two main purposes:
The learning outcomes are part of a hierarchy of learning objectives. The verbs used at the beginning of each learning outcome relate to a specific learning objective e.g.
Calculate the breakeven point, profit target, margin of safety and profit/volume ratio for a single product or service.
The verb ‘calculate’ indicates a level three learning objective. The following table lists the learning objectives and the verbs that appear in the CIMA Cert BA syllabus learning outcomes.
(a) To define the skill or ability that a well prepared candidate should be able to exhibit in the examination
(b) To demonstrate the approach likely to be taken in examination questions
xi
CIMA's hierarchy of learning objectives
CIMA place great importance on the definition of verbs in structuring Objective Test Examinations. It is therefore crucial that you understand the verbs in order to appreciate the depth and breadth of a topic and the level of skill required. The CIMA Cert BA syllabus learning outcomes and objective test questions will focus on levels one, two and three of the CIMA's hierarchy of learning objectives (knowledge, comprehension and application). However, as you progress to the Operational, Management and Strategic levels of the CIMA Professional Qualification, testing will include levels four and five of the hierarchy. As you complete your CIMA Professional Qualification, you can therefore expect to be tested on knowledge, comprehension, application, analysis and evaluation.
In CIMA Cert BA Objective Test Examinations you will meet verbs from only levels 1, 2, and 3 of the hierarchy which are as follows:
Level 1: KNOWLEDGE
What you are expected to know
For example you could be asked to define economic terms such as 'inflation' (BA1), or to define the term 'management accounting' (BA2) or to state the accounting entries required to record the revaluation surplus arising on revaluation of land and buildings (BA3).
VERBS USED
DEFINITION
List
State
Define
Make a list of.
Express, fully or clearly, the details/facts of.
Give the exact meaning of.
introduction
xii
Level 2: COMPREHENSION
What you are expected to understand
For example you could be asked to explain the components of the circular flow of funds (BA1), or distinguish between financial accounting and management accounting (BA3) or distinguish between express terms and implied terms of a contract of employment (BA4).
Level 3: APPLICATION
How you are expected to apply your knowledge
For example you could be asked to reconcile the differences between profits calculated using absorption costing and marginal costing (BA2), or to calculate the gain or loss on disposal of a noncurrent asset (BA3) or to apply relevant principles to determine the outcome of a lawbased or ethical problem (BA4).
VERBS USED
DEFINITION
Describe
Distinguish
Explain
Identify
Illustrate
Communicate the key features of.
Highlight the differences between.
Make clear or intelligible/state the meaning or purpose of.
Recognise, establish or select after consideration.
Use an example to describe or explain something.
VERBS USED
DEFINITION
Apply
Calculate
Demonstrate
Prepare
Reconcile
Solve
Tabulate
Put to practical use.
Ascertain or reckon mathematically.
Prove with certainty or exhibit by practical means.
Make or get ready for use.
Make or prove consistent/compatible.
Find an answer to.
Arrange in a table.
xiii
For reference, levels 4 and 5 of the hierarchy require demonstration of analysis and evaluation skills respectively. Further detail on levels 4 and 5 of the hierarchy which are tested in the CIMA Professional Qualification can be obtained from the CIMA website.
CIMA Cert BA resources
Access to CIMA Cert BA resources including syllabus information are available online at www.cimaglobal.com/
Additional resources
This Study Text is designed to be comprehensive and therefore sufficient to meet the needs of students studying this subject. However, CIMA recognises that many students also want to read around particular topic(s), either to extend their knowledge and understanding, or because it is particularly relevant to their work environment.
CIMA has therefore produced a related reading list for those students who wish to extend their knowledge and understanding, whether for personal interest or to help support work activities as follows:
BA1 Fundamentals of Business Economics Principles of Economics 3rd ed. McDowell & ThomApplied Economics 12th ed. Griffiths & WallMathematics for Economists: An Introductory Textbook 4th ed.
Pemberton & Rau
BA2 Fundamentals of Management Accounting Management and Cost Accounting Colin DruryManagement Accounting Catherine Gowthorpe
BA3 Fundamentals of Financial Accounting Financial Accounting – An Introduction Pauline WeetmanFrank Wood's Business Accounting 1 & 2 Frank Wood & Alan Sangster
introduction
xiv
Information concerning formulae and tables will be provided via the CIMA website, www.cimaglobal.com, and your ENgage login.
BA4 Fundamentals of Ethics, Corporate Governance and Business Law Students can find out about the specific law and regulation in their jurisdiction by referring to appropriate texts and publications for their country. Managing Responsible Business CGMA Report 2015 Global Management Accounting Principles CIMA 2015Embedded Ethical Values: A Guide for CIMA Partners
CIMA Report 2014
Business Ethics for SMEs: A Guide for CIMA Partners
CIMA Report 2014
Ethics: Ethical Checklist CIMA 2014Ethics Support Guide CIMA 2014Acting under Pressure: How management accountants manage ethical issues
CIMA 2012
xv
xvi
BA2 FUNDAMENTALS OF MANAGEMENT ACCOUNTING Syllabus overview This subject deals with the fundamental knowledge and techniques that underpin management accounting. It identifies the position of the management accountant within organisations and the role of CIMA. The subject portrays the role of management accounting in the contexts of commercial and public sector bodies and its wider role in society. The identification and classification of costs and their behaviour provides the basis for understanding and applying the tools and techniques needed to plan, control and make decisions. Budgetary control requires the setting of targets and standards which then allow the performance of organisations to be reported and analysed by the calculation of variances. Investment appraisal, break-even analysis and profit maximisation are used to inform both long and short-term decision making. Assessment strategy There will be a two hour computer based assessment, comprising 60 compulsory objective test questions. Short scenarios may be given to which one or more objective test questions relate. Syllabus structure The syllabus comprises the following topics and weightings:
Weight Syllabus topic
10% A. The Context of Management Accounting
25% B. Costing
30% C. Planning and Control
35% D. Decision Making
BA
2 –
A.
TH
E C
ON
TE
XT
OF
MA
NA
GE
ME
NT
AC
CO
UN
TIN
G (
10%
)
Lea
rnin
g o
utc
om
es
On
com
plet
ion
of th
eir
stud
ies,
stu
dent
s sh
ould
be
able
to:
In
dic
ativ
e sy
llab
us
con
ten
t
Lea
d
Co
mp
on
ent
Lev
el
1 ex
pla
in t
he
pu
rpo
se o
f m
anag
emen
t ac
cou
nti
ng
an
d t
he
role
of
the
Man
agem
ent
Ac
cou
nta
nt.
(a)
expl
ain
the
nee
d fo
r m
anag
emen
t ac
coun
ting
2 •
The
Glo
bal M
anag
emen
t A
ccou
ntin
g
Prin
cipl
es.
(b)
expl
ain
the
cha
ract
eris
tics
of f
inan
cial
in
form
atio
n fo
r op
erat
iona
l, m
anag
eria
l and
st
rate
gic
leve
ls w
ithin
org
anis
atio
n
2 •
Cha
ract
eris
tics
of fi
nanc
ial i
nfor
mat
ion.
(c)
expl
ain
the
rol
e of
the
man
agem
ent
acco
unta
nt
2 •
The
CIM
A d
efin
ition
of t
he r
ole
of th
e m
anag
emen
t ac
coun
tant
.
(d)
expl
ain
the
rel
atio
nshi
ps b
etw
een
the
man
agem
ent
acco
unta
nt a
nd th
e or
gan
isat
ion’
s m
anag
ers.
2 •
The
IF
AC
def
initi
on o
f th
e do
mai
n of
the
prof
essi
onal
acc
ount
ant
in b
usin
ess.
•
The
pos
ition
ing
of m
anag
emen
t ac
coun
ting
with
in t
he o
rgan
isat
ion.
2 ex
pla
in t
he
role
of
CIM
A
as a
pro
fess
ion
al b
od
y fo
r M
anag
emen
t A
cco
un
tan
ts.
(a)
expl
ain
the
rol
e of
CIM
A in
dev
elop
ing
the
pr
actic
e of
man
agem
ent a
ccou
ntin
g.
2 •
The
nee
d fo
r a
prof
essi
onal
bod
y in
m
anag
emen
t ac
coun
ting.
•
CIM
A’s
rol
e in
rel
atio
n to
its
mem
bers
, st
uden
ts, t
he p
rofe
ssio
n of
man
agem
ent
acco
untin
g a
nd s
ocie
ty.
BA
2 –
B.
CO
ST
ING
(25
%)
Lea
rnin
g o
utc
om
es
On
com
plet
ion
of th
eir
stud
ies,
stu
dent
s sh
ould
be
able
to:
In
dic
ativ
e sy
llab
us
con
ten
t
Lea
d
Co
mp
on
ent
Lev
el
1 d
emo
nst
rate
co
st
iden
tifi
cati
on
an
d
clas
sifi
cati
on
.
(a)
expl
ain
the
cla
ssifi
catio
n of
cos
ts in
rel
atio
n to
ou
tput
2
• D
irect
and
indi
rect
cos
ts.
(b)
expl
ain
the
cla
ssifi
catio
n of
cos
ts in
rel
atio
n to
ac
tivity
leve
l 2
• V
aria
ble,
sem
i-var
iabl
e, s
tepp
ed a
nd f
ixed
co
sts.
(c)
calc
ulat
e ap
prop
riate
cos
ts h
avin
g id
entif
ied
cost
beh
avio
ur
3 •
The
use
of
‘hig
h-lo
w’,
grap
hica
l and
reg
ress
ion
anal
ysis
met
hods
to e
stab
lish
and
pred
ict
tota
l co
st.
(d)
expl
ain
the
cla
ssifi
catio
n of
cos
ts in
rel
atio
n to
de
cisi
ons.
2
• R
elev
ant
and
irrel
evan
t co
sts.
2 ap
ply
ab
sorp
tio
n c
ost
ing
an
d m
arg
inal
co
stin
g.
(a)
prep
are
over
head
cos
t st
atem
ents
3
• O
verh
ead
cost
sta
tem
ents
: al
loca
tion,
ap
port
ionm
ent
and
reci
proc
al s
ervi
cing
. N
ote
: T
he r
epea
ted
dist
ribut
ion
and
sim
ulta
neou
s eq
uatio
ns m
etho
ds w
ill b
e us
ed fo
r re
cipr
ocal
se
rvic
ing
.
(b)
calc
ulat
e th
e fu
ll co
st o
f pro
duct
s, s
ervi
ces
and
activ
ities
3
• T
he tr
eatm
ent o
f di
rect
and
indi
rect
cos
ts in
as
cert
aini
ng th
e fu
ll co
st o
f a
‘cos
t ob
ject
’ e.g
. a
prod
uct,
serv
ice,
act
ivity
, cu
stom
er.
• O
verh
ead
abso
rptio
n ra
tes.
•
Und
er o
r ov
er a
bsor
bed
over
head
s.
(c)
calc
ulat
e th
e m
arg
inal
cos
t of
pro
duct
s,
serv
ices
and
act
iviti
es
3 •
The
trea
tmen
t of
dire
ct a
nd in
dire
ct c
osts
in
asce
rtai
ning
the
mar
gin
al c
ost
of a
‘cos
t ob
ject
’ e.
g. a
pro
duct
, ser
vice
, ac
tivity
, cu
stom
er.
(d)
reco
ncile
the
diff
eren
ces
betw
een
prof
its
calc
ulat
ed u
sing
abs
orpt
ion
cost
ing
and
thos
e ca
lcul
ated
usi
ng m
arg
inal
cos
ting
3 •
The
diff
eren
ce b
etw
een
mar
gin
al a
nd
abso
rptio
n pr
ofits
.
Lea
rnin
g o
utc
om
es
On
com
plet
ion
of th
eir
stud
ies,
stu
dent
s sh
ould
be
able
to:
In
dic
ativ
e sy
llab
us
con
ten
t
Lea
d
Co
mp
on
ent
Lev
el
(e
) ap
ply
cost
info
rmat
ion
in p
ricin
g d
ecis
ions
. 3
• M
arg
inal
cos
t pr
icin
g an
d fu
ll-co
st p
ricin
g to
ac
hiev
e sp
ecifi
ed ta
rget
s (r
etur
n on
sal
es,
retu
rn o
n in
vest
men
t, m
ark-
up a
nd m
arg
ins)
. N
ote
: S
tude
nts
are
not
expe
cted
to
have
a
deta
iled
know
ledg
e of
act
ivity
-bas
ed c
ostin
g (A
BC
).
BA
2 –
C. P
LA
NN
ING
AN
D C
ON
TR
OL
(3
0%
)
Lea
rnin
g o
utc
om
es
On
com
plet
ion
of th
eir
stud
ies,
stu
dent
s sh
ould
be
able
to:
In
dic
ativ
e sy
llab
us
con
ten
t
Lea
d
Co
mp
on
ent
Lev
el
1 p
rep
are
bu
dg
ets
for
pla
nn
ing
an
d c
on
tro
l. (a
) ex
pla
in w
hy
org
anis
atio
ns p
repa
re fo
reca
sts
and
plan
s 2
• B
udg
etin
g fo
r pl
anni
ng a
nd c
ontr
ol.
(b)
prep
are
func
tiona
l bud
get
s 3
• F
unct
iona
l bud
get
s.
(c)
expl
ain
bud
get
sta
tem
ents
2
• M
aste
r bu
dget
, in
clud
ing
stat
emen
ts o
f pr
ofit
and
loss
, fin
anci
al p
ositi
on a
nd c
ash
flow
.
(d)
iden
tify
the
impa
ct o
f bu
dget
ed c
ash
surp
luse
s an
d sh
ortf
alls
on
busi
ness
op
erat
ions
2 •
The
impo
rtan
ce o
f ca
sh b
udg
ets.
(e)
prep
are
a fle
xibl
e bu
dget
3
• F
ixed
and
fle
xibl
e bu
dget
ing
.
(f)
calc
ulat
e bu
dget
var
ianc
es.
3 •
Bud
get
var
ianc
es.
2 ap
ply
var
ian
ce a
nal
ysis
to
rec
on
cile
bu
dg
eted
an
d a
ctu
al p
rofi
ts in
a
mar
gin
al f
orm
at.
(a)
expl
ain
wh
y pl
anne
d st
anda
rd c
osts
, pr
ices
an
d vo
lum
es a
re u
sefu
l 2
• P
rinci
ples
of
stan
dard
cos
ting.
(b)
calc
ulat
e va
rianc
es f
or m
ater
ials
, la
bour
, va
riabl
e ov
erhe
ads,
sal
es p
rices
and
sal
es
volu
mes
3 •
Sta
ndar
ds f
or th
e se
lling
pric
e an
d va
riabl
e co
sts
of a
pro
duct
or
serv
ice.
•
Var
ianc
es: m
ater
ials
(to
tal,
pric
e an
d us
age)
; la
bour
(to
tal,
rate
and
eff
icie
ncy)
; va
riabl
e ov
erhe
ad (
tota
l, ex
pend
iture
and
eff
icie
ncy)
; sa
les
(sal
es p
rice
and
sale
s vo
lum
e co
ntrib
utio
n).
(c)
prep
are
a st
atem
ent t
hat
reco
ncile
s bu
dget
ed
prof
it w
ith a
ctua
l pro
fit c
alcu
late
d us
ing
mar
gin
al c
ostin
g
3 •
The
use
of
varia
nces
to
reco
ncile
the
bud
get
ed
and
actu
al p
rofit
s th
at h
ave
been
cal
cula
ted
usin
g m
arg
inal
cos
ting
.
(d)
expl
ain
wh
y va
rianc
es c
ould
hav
e ar
isen
and
th
e in
ter-
rela
tions
hips
bet
wee
n va
rianc
es.
2 •
Inte
rpre
tatio
n of
var
ianc
es.
Lea
rnin
g o
utc
om
es
On
com
plet
ion
of th
eir
stud
ies,
stu
dent
s sh
ould
be
able
to:
In
dic
ativ
e sy
llab
us
con
ten
t
Lea
d
Co
mp
on
ent
Lev
el
3 ca
lcu
late
ap
pro
pri
ate
fin
anci
al a
nd
no
n-
fin
anci
al p
erfo
rman
ce
mea
sure
s.
(a)
expl
ain
the
nee
d fo
r ap
prop
riate
per
form
ance
m
easu
res
2 •
Cha
ract
eris
tics
of s
ervi
ce in
dust
ries.
•
Res
pons
ibili
ty a
ccou
ntin
g (a
utho
rity,
re
spon
sibi
lity
and
cont
rolla
bilit
y).
(b)
calc
ulat
e ap
prop
riate
fina
ncia
l and
non
- fin
anci
al p
erfo
rman
ce m
easu
res
in a
var
iety
of
con
text
s.
3 •
The
use
of
appr
opria
te f
inan
cial
and
non
-fin
anci
al p
erfo
rman
ce m
easu
res
in a
var
iety
of
cont
exts
(e.
g. m
anuf
actu
ring
and
serv
ice
sect
ors)
. N
ote
: D
etai
led
know
ledg
e of
the
bal
ance
d sc
orec
ard
is n
ot r
equi
red.
4 p
rep
are
acco
un
ts a
nd
re
po
rts
for
man
ager
s.
(a)
expl
ain
the
inte
grat
ion
of t
he c
ost
acco
unts
w
ith t
he f
inan
cial
acc
ount
ing
syst
em
2 •
Man
ufac
turin
g ac
coun
ts in
clud
ing
raw
mat
eria
l, w
ork-
in-p
rog
ress
, fin
ishe
d g
oods
and
m
anuf
actu
ring
over
head
con
trol
acc
ount
s.
(b)
prep
are
a se
t of
inte
gra
ted
acco
unts
, sh
owin
g
stan
dard
cos
t va
rianc
es
3 •
Inte
grat
ed le
dger
s in
clud
ing
acc
ount
ing
for
over
and
und
er a
bsor
ptio
n of
pro
duct
ion
over
head
. •
The
tre
atm
ent
of v
aria
nces
in in
tegr
ated
ledg
er
syst
ems.
(c)
prep
are
appr
opria
te a
ccou
nts
for
job
and
batc
h co
stin
g 3
• Jo
b an
d ba
tch
cost
ing.
(d)
prep
are
repo
rts
in a
ran
ge o
f or
gan
isat
ions
. 3
• C
ost
acco
untin
g s
tate
men
ts fo
r m
anag
emen
t in
form
atio
n in
man
ufac
turin
g, s
ervi
ce a
nd n
ot-
for-
prof
it or
gan
isat
ions
.
BA
2 –
D.
DE
CIS
ION
MA
KIN
G (
35
%)
Lea
rnin
g o
utc
om
es
On
com
plet
ion
of th
eir
stud
ies,
stu
dent
s sh
ould
be
able
to:
In
dic
ativ
e sy
llab
us
con
ten
t
Lea
d
Co
mp
on
ent
Lev
el
1 d
emo
nst
rate
th
e im
pac
t o
f ri
sk.
(a)
expl
ain
the
con
cept
s of
ris
k an
d un
cert
aint
y 2
• R
isk
and
unce
rtai
nty.
(b)
dem
onst
rate
the
use
of
expe
cted
val
ues
and
join
t pr
obab
ilitie
s in
dec
isio
n m
akin
g 3
• P
roba
bilit
y an
d its
rel
atio
nshi
p w
ith p
ropo
rtio
ns
and
perc
enta
ges
. •
Exp
ecte
d va
lues
and
exp
ecte
d va
lues
tab
les.
•
Lim
itatio
ns o
f ex
pect
ed v
alue
s.
(c)
calc
ulat
e su
mm
ary
mea
sure
s of
cen
tral
te
nden
cy a
nd d
ispe
rsio
n fo
r bo
th g
roup
ed
and
ung
roup
ed d
ata
3 •
Arit
hmet
ic m
ean,
med
ian,
mod
e, r
ang
e,
varia
nce,
sta
ndar
d de
viat
ion
and
coef
ficie
nt o
f va
riatio
n fo
r bo
th u
ngro
uped
and
gro
uped
da
ta.
(d)
dem
onst
rate
the
use
of
the
norm
al
dist
ribut
ion.
3
• G
raph
s/di
agra
ms
and
use
of n
orm
al
dist
ribut
ion
tabl
es.
No
te:
Stu
dent
s w
ill n
ot b
e as
ked
to a
pply
te
chni
que
s to
dea
l with
unc
erta
inty
.
2 d
emo
nst
rate
th
e u
se o
f ap
pro
pri
ate
tech
niq
ues
fo
r sh
ort
-ter
m d
ecis
ion
m
akin
g.
(a)
appl
y br
eake
ven
anal
ysis
3
• B
reak
even
cha
rts,
pro
fit v
olum
e g
raph
s,
brea
keve
n po
int,
targ
et p
rofit
, mar
gin
of
safe
ty.
(b)
dem
onst
rate
mak
e or
buy
dec
isio
ns
3 •
Mak
e or
buy
dec
isio
ns.
(c)
calc
ulat
e th
e pr
ofit
max
imis
ing
sale
s m
ix a
fter
us
ing
lim
iting
fac
tor
anal
ysis
. 3
• Li
miti
ng f
acto
r an
alys
is fo
r a
mul
ti- p
rodu
ct
com
pany
tha
t ha
s on
e sc
arce
res
ourc
e.
3 d
emo
nst
rate
th
e u
se o
f ap
pro
pri
ate
tech
niq
ues
fo
r lo
ng
-ter
m d
ecis
ion
m
akin
g.
(a)
expl
ain
the
tim
e va
lue
of m
oney
2
• T
he t
ime
valu
e of
mon
ey.
(b)
appl
y fin
anci
al m
athe
mat
ics
3 •
Dis
coun
ting,
com
poun
ding
, an
nuiti
es a
nd
perp
etui
ties.
(c)
calc
ulat
e th
e ne
t pre
sent
val
ue,
inte
rnal
rat
e of
ret
urn
and
payb
ack
for
an in
vest
men
t or
pr
ojec
t.
3 •
Net
pre
sent
val
ue,
inte
rnal
rat
e of
ret
urn
and
payb
ack.