COST & MANAGEMENT ACCOUNTING AND FINANCIAL …

SYLLABUS - 2016

10 INTERMEDIATE : PAPER -

COST & MANAGEMENT ACCOUNTING AND FINANCIAL MANAGMENT INTERMEDIATE

STUDY NOTES

The Institute of Cost Accountants of India CMA Bhawan, 12, Sudder Street, Kolkata - 700 016

First Edition: August 2016 Reprint: September 2017 Reprint: January 2018 Reprint: June 2018 Reprint: January 2019 Edition: August 2019 Edition: October 2019

Published by : Directorate of Studies The Institute of Cost Accountants of India (ICAI) CMA Bhawan, 12, Sudder Street, Kolkata - 700 016

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Syllabus - 2016

PAPER 10: COST & MANAGEMENT ACCOUNTING AND FINANCIAL MANAGEMENT

Syllabus Structure The syllabus comprises the following topics and study weightage:

A Cost & Management Accounting

50%

B Financial Management

50%

A

B

50%

50%

ASSESSMENT STRATEGY There will be written examination paper of three hours.

OBJECTIVE

To provide an in depth knowledge of the detailed procedures and documentation involved in cost ascertainment systems. To understand the concepts of Financial Management and its application for managerial decision making. Learning Aims The syllabus aims to test the student's ability to: U nderstand the cost and management accounting techniques for evaluation, analysis and application in

managerial decision making; Compare and contrast marginal and absorption costing methods in respect of profit reporting; A pply marginal and absorption costing approaches in job, batch and process environments; Prepare and interpret budgets and standard costs and variance statements; Identify and apply the concepts of Financial Management

Skill Set required

Level B: Requiring the skill levels of knowledge, comprehension, application and analysis. Note: Subjects related to applicable statutes shall be read with amendments made from time to time.

Section A : Cost & Management Accounting

50%

1. Cost and Management Accounting - Introduction

2. Decision Making Tools

3. Budgeting and Budgetary Control

4. Standard Costing and Variance Analysis

5. Learning Curve

Section B : Financial Management

50%

6. Introduction to Financial Management

7. Tools for Financial Analysis and Planning

8. Working Capital Management

9. Cost of Capital, Capital Structure Theories, Dividend Decisions and Leverage Analysis

10. Capital Budgeting - Investment Decisions

SECTION A: COST & MANAGEMENT ACCOUNTING [50 MARKS] 1. Cost and Management Accounting:

Introduction to Management Accounting - Relationship between Management Accounting and Cost Accounting 2. Decision Making Tools: (a) Marginal Costing: Break Even Analysis and Cost - volume - profit analysis; break-even charts and profit

charts; differential cost analysis; stock valuation under marginal costing vs. absorption costing; applications of marginal costing in decision making. (b) Transfer Pricing - Determination of Inter-departmental or Inter-company Transfer Price 3. Budgeting and Budgetary Control: (a) Budgetary Control and Preparation of Functional and Master Budgeting. (b) Fixed, Variable, Semi-Variable Budgets (c) Zero Based Budgeting (ZBB) 4. Standard Costing & Variance Analysis: Computation of variances for each of the elements of costs, Sales Variances, Investigation of variances Valuation of Stock under Standard Costing - Uniform Costing and inter-firm comparison. 5. Learning Curve: Concept of Learning curve and its application.

SECTION B: FINANCIAL MANAGEMENT [50 MARKS] 6. Introduction to Financial Management:

Meaning - Objectives - Scope of Financial Management sources of Finance - Introduction to Financial Markets. 7. Tools for Financial Analysis and Planning:

Financial Ratio Analysis - Funds Flow Analysis - Cash Flow Analysis. 8. Wroking Capital Management

Working Capital Management - Financing of Working Capital 9. Cost of Capital, Capital Structure Theories, Dividend Decisions and Leverage Analysis

Meaning of Cost of Capital - Computation of Cost of Capital - Capital Structure Theories and Dividend Decisions Theories (Walters - MM - Gordon Models) - Leverage Analysis 10. Capital Budgeting - Investment Decisions: Concept of Capital Budgeting - Non-Discounted and Discounted Cash Flow Method - Ranking of Projects.

Contents

SECTION A - COST & MANAGEMENT ACCOUNTING

Study Note 1 : Cost and Management Accounting ? Introduction

1.1

Introduction

1

1.2

Management Accounting - Definition

2

1.3

Objectives of Management Accounting

3

1.4

Role of Management Accounting in Management Process

3

1.5

Functions of Management Accounting

4

1.6

Significance of Management Accounting

6

1.7

Limitations of Management Accounting

6

1.8

Relationship between Management Accounting and Cost Accounting

7

Study Note 2 : Decision Making Tools

2.1

Marginal Costing

11

2.2

Determination of Cost and Profit under Marginal Costing

14

2.3

Realities about Marginal Costing

15

2.4

Techniques of Marginal Costing

15

2.5

Differential Cost Analysis

27

2.6

Differences between Absorption Costing and Marginal Costing

29

2.7

Application of Marginal Costing in Decision Making

29

2.8

Transfer Pricing

41

2.9

Objectives of Inter Company Transfer Pricing

42

2.10

Methods of Transfer Pricing

42

Study Note 3 : Budgeting and Budgetary Control

3.1

Budgetary Control and Preparation of Functional and Master Budgeting

103

3.2

Fixed, Variable, Semi-variable Budgets

110

3.3

Zero Based Budgeting (ZBB)

112

Study Note 4 : Standard Costing and Variance Analysis

4.1

Introduction

135

4.2

Computation of Variances for each of the Elements of Costs, Sales Variances

138

4.3

Investigation of Variances & Reporting of Variances

152

4.4

Valuation of Stock under Standard Costing

154

4.5

Uniform Costing and Inter-firm Comparison

155

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