M 2 a r 0 c OpenTuition.com 1 h 6 /J e u x n a Free resources for accountancy students me s F2 A C C Management A Accounting FMA A I F Please spread the word about OpenTuition, so that all ACCA students can benefit. ONLY with your support can the site exist and continue to provide free study materials! Visit opentuition.com for the latest updates - watch the free lectures that accompany these notes; attempt free tests online; get free tutor support, and much more. OpenTuition Lecture Notes can be downloaded FREE from http://opentuition.com Copyright belongs to OpenTuition.com - please do not support piracy by downloading from other websites. The best things in life are free IMPORTANT!!! PLEASE READ CAREFULLY To benefit from these notes you must watch the free lectures on the OpenTuition website in which we explain and expand on the topics covered In addition question practice is vital!! You must obtain a current edition of a Revision / Exam Kit from one of the ACCA approved content providers they contain a great number of exam standard questions (and answers) to practice on. You should also use the free “Online Multiple Choice Tests” and the “Flashcards” which you can find on on the OpenTuition website. http://opentuition.com/acca/ March/June 2016 Exam ACCA F2 1 Contents 1. Accounting for Management ..........................................................................................................................3 2. Sources of Data ....................................................................................................................................................7 3. Presenting Information .....................................................................................................................................9 4. Cost Classification .............................................................................................................................................11 5. Inventory Control ..............................................................................................................................................17 6. Accounting for labour .....................................................................................................................................25 7. Accounting for Overheads .............................................................................................................................27 8. The Management Accountant’s Profit Statement – Absorption Costing .....................................33 9. The Management Accountant’s Profit Statement – Marginal Costing .........................................37 10. Process Costing – Introduction ....................................................................................................................41 11. Process Costing – Losses ................................................................................................................................45 12. Process Costing – Work-in-Progress ...........................................................................................................49 13. Process Costing – Joint Products ................................................................................................................53 14. Alternative cost accounting ..........................................................................................................................57 15. Budgeting ............................................................................................................................................................59 16. Behavioural aspects of budgeting ..............................................................................................................67 17. Semi-Variable Costs ..........................................................................................................................................69 18. Time Series Analysis .........................................................................................................................................75 19. Index Numbers ..................................................................................................................................................79 20. Interest ..................................................................................................................................................................83 21. Investment Appraisal .......................................................................................................................................89 22. Variance Analysis ...............................................................................................................................................93 23. Performance Measurement Overview .......................................................................................................99 24. Financial Performance Measurement .....................................................................................................101 25. Non-financial performance measurement ............................................................................................107 26. Divisional Performance Measurement ....................................................................................................111 27. Answers To Examples ....................................................................................................................................113 Free ACCA course notes (cid:116) Free ACCA lectures (cid:116) Free tests (cid:116) Free tutor support (cid:116) StudyBuddy (cid:116) Largest ACCA forums March/June 2016 Exam ACCA F2 2 Access FREE ACCA F2 online resources on OpenTuition: F2 Lectures a complete course for paper F2 F2 Practice Questions Test yourself as you study F2 Revision Quick Revision after completing the course F2 Revision Mock Exam Practice exam under time pressure F2 Forums get help from other students Ask F2 Tutor Post questions to a ACCA tutor visit http://opentuition.com/acca/f2/ Free ACCA course notes (cid:116) Free ACCA lectures (cid:116) Free tests (cid:116) Free tutor support (cid:116) StudyBuddy (cid:116) Largest ACCA forums March/June 2016 Exam ACCA F2 3 Chapter 1 ACCOUNTING FOR MANAGEMENT 1. Introduction The purpose of management accounting is to assist management in running the business in ways that will improve the performance of the business. 2. Data and information One way of assisting management is to provide them with good information to help them with their decisions. The information can be provided to them in different ways, but is usually in the form of reports. For example, a report analysing costs of producing each of several products may assist management in deciding which products to produce. It is the management accountant who will be expected to provide the information, and in order to do so he/she needs to collect data. Data consists of the facts that are gathered and stored. Data has no clear meaning until it is processed – analysed and sorted – into information. 3. What makes good information? Good quality information should: ๏ have a purpose and be relevant for the purpose ๏ be timely ๏ be understandable (to the manager using it) ๏ be accurate ๏ be complete (but not excessive) ๏ be communicated to the right person ๏ be communicated by an appropriate channel (for example, be printed or be sent electronically) Free ACCA course notes (cid:116) Free ACCA lectures (cid:116) Free tests (cid:116) Free tutor support (cid:116) StudyBuddy (cid:116) Largest ACCA forums March/June 2016 Exam ACCA F2 4 4. The main managerial processes The main areas of management accounting are: ๏ Costing Cost accounting is identifying the cost of producing an item (or providing a service) in order to, for example, assist in deciding on a selling price. ๏ Planning e.g. plan how many staff will be required in the factory next year ๏ Decision making e.g. decide on what selling price to charge for a new product ๏ Control e.g. check month-by-month whether the company is over or under spending on wages 5. The different levels of planning ๏ strategic planning long-term plans (e.g. 5 to 10 years) for the business e.g. what new offices to open? / what new products to launch? ๏ tactical planning medium-term, more detailed, plans – usually involving producing budgets for the next year e.g. how many staff to employ next year? ๏ operational planning short-term planning and decisions e.g. which supplier to choose for a purchase next week Free ACCA course notes (cid:116) Free ACCA lectures (cid:116) Free tests (cid:116) Free tutor support (cid:116) StudyBuddy (cid:116) Largest ACCA forums March/June 2016 Exam ACCA F2 5 6. Comparison of management accounting with financial accounting Example 1 Financial Accounting Management Accounting WHEN YOU FINISHED THIS CHAPTER YOU SHOULD ATTEMPT THE ONLINE F2 MCQ TEST Free ACCA course notes (cid:116) Free ACCA lectures (cid:116) Free tests (cid:116) Free tutor support (cid:116) StudyBuddy (cid:116) Largest ACCA forums March/June 2016 Exam ACCA F2 6 Free ACCA course notes (cid:116) Free ACCA lectures (cid:116) Free tests (cid:116) Free tutor support (cid:116) StudyBuddy (cid:116) Largest ACCA forums March/June 2016 Exam ACCA F2 7 Chapter 2 SOURCES OF DATA 1. Introduction The management accountant needs data in order to be able to process it into information. This chapter lists various sources of data and also various sampling techniques. 2. Primary and secondary sources of data Primary data are data that have been collected for the specific purpose. Secondary data are data that have been collected for some other purpose but which we then use for our purposes. 3. Internal and external sources data Internal data are data collected from our own records. These are the main source of primary data. External data are data collected from elsewhere – e.g. the internet, government statistics, financial newspapers. These will be secondary data. 4. Sampling It is common to collect data from a sample rather than from the whole population. Data from the sample are used as representative of the whole population. 5. Sampling methods You should be aware of the following methods of sampling: ๏ random sampling Every item in the population has an equal chance of being selected ๏ systematic sampling Select (for example) every 10th item in the population Free ACCA course notes (cid:116) Free ACCA lectures (cid:116) Free tests (cid:116) Free tutor support (cid:116) StudyBuddy (cid:116) Largest ACCA forums March/June 2016 Exam ACCA F2 8 ๏ stratified sampling Split the population into groups, and then select at random. For example, if 60% of the population are women and 40% are men, then 60% of the sample should be women and 40% men. ๏ multistage sampling For example, suppose a company has several thousand purchase invoices filed, filling 20 files. Take a random sample of (say) 5 files, and then a random sample of (say) 20 invoices from each of these files. ๏ cluster sampling For example, suppose a company has 100 offices through the country, each issuing sales invoices. Take a random sample of (say) 5 offices and check every invoice at each of these offices. ๏ quota sampling Suppose the population is 60% women and 40% men, and that we want to question a sample of 200 total. Decide on a quota of 120 women (60%) and 80 men (40%) and then stop people as they appear until we have the required number of each. WHEN YOU FINISHED THIS CHAPTER YOU SHOULD ATTEMPT THE ONLINE F2 MCQ TEST Free ACCA course notes (cid:116) Free ACCA lectures (cid:116) Free tests (cid:116) Free tutor support (cid:116) StudyBuddy (cid:116) Largest ACCA forums