University of Technology

School of Business Administration



COURSE TITLE:    Cost and Management Accounting (CMA)

WEB SITE:      

GROUP:                     Post-Diploma BBA1 (Acc & Fin)

DURATION:              Semester 1


LECTURER   Rohan Chambers
C/o School of Business, Ext.2141 
Personal web site:
Office Hours: 


Tuesdays: 5-6pm for part time students

Saturdays: 12-1:00pm for part time students

 TUTORS:   Mr. Gregory Gibson Mr. David Fray
Contact Information: To be announced Contact Information: To be announced



This course seeks to provide further analysis of the critical role of management accounting concepts, models and methodologies in providing information to management for management decision-making, controlling the day- to-day activities of the firm and the planning of future activities. It will review and expand on topics covered in Year 2 of the Diploma in Business Administration such as Cash and Capital Budgeting, C-V-P Analysis and introduce new areas such as Decision making, and Variance Analysis. 




Topics and Slides - (the relevant chapter from the text is in the curved brackets) - [ the week in which the lecture will be covered is in the square brackets]

Tutorial [the week in which the tutorial will be covered is in the square brackets]

 Supplemental articles/web sites

The links with require Adobe Acrobat Reader to view them. If you do not have this software click below:



Introduction (1) - [Wk. 1]

Specific Objectives:

  • Describe the major users of accounting information
  • Explain the role of budgets and performance reports in planning and control
  • Identify current trends in management accounting

Questions, Solutions



Cost Behaviour & CVP Relationships (2) - [Wk.2]

Specific Objectives:

  • Explain how cost drivers affect cost behaviour
  • Show how changes in cost-driver activity levels affect variable and fixed costs
  • Calculate break-even sales volume in total dollars and total units
  • Create a cost-volume-profit graph and understand the assumptions behind it
  • Calculate sales volume in total dollars and total units to reach a target profit
  • Calculate contribution margin and gross margin
  • Explain the effects of sales mix on profits
  • Computes cost-volume-profit relationships on an after-tax basis
Questions, Solutions
3 Cost Measurement (3) - [Wk.3]

Specific Objectives:

  • Explain step and mixed-cost behaviour
  • Explain management influences on cost behaviour
  • Measure and mathematically express cost functions and use them to predict costs
  • Describe the importance of activity analysis for measuring cost functions
  • Measure cost behaviour using the account analysis, high-low, visual fit, and least-squares regressions methods
Questions, Solutions

Topics include:

1. Direct, indirect & unallocated costs and

2. Financial Statements of merchandisers vs. manufacturers



Master Budget (7) - [Wk.4]

Specific Objectives:

  • Explain the major features and advantages of a master budget

  • Follow the principal steps in preparing a master budget

  • Prepare the operating budget and the supporting schedules

  • Prepare the financial budget

  • Understand the difficulties of sales forecasting

  • Anticipate possible human relations problems caused by budgets

  • Use a spreadsheet to develop a budget


Questions, Solutions



Flexible Budgets and Variance Analysis (8) - [Wk. 6-7]

Specific Objectives:

  • Distinguish between flexible budgets and master (static) budgets.

  • Use flexible-budget formulas to construct a flexible budget based on the volume of sales.

  • Understand the performance evaluation relationship between master (static) budgets and flexible budgets.

  • Compute flexible-budget variances and sales-activity variances.

  • Compute and interpret price and usage variances for inputs based on cost-driver activity.

  • Compute variable overhead spending and efficiency variances



Questions, Solutions


Relevant Information & Decision Making: Marketing Decisions (5) - [Wk. 8]

Specific Objectives:

  • Discriminate between relevant and irrelevant information for making decisions.

  • Use the decision process to make business decisions.

  • Decide to accept or reject a special order using the contribution margin technique.

  • Decide to add or delete a product line using relevant information.

  • Compute a measure of product profitability when product is constrained by a scarce resource.

Questions, Solutions
7 Relevant Information & Decision Making: Production Decisions (6) - [Wk. 9-10]

Specific Objectives:

  • Use opportunity cost to analyze the income effects of a given alternative.

  • Decide whether to make or to buy certain parts or products.

  • Decide whether a joint product should be processed beyond the split-off point.

  • Identify irrelevant information in disposal of obsolete inventory and equipment replacement decisions.

  • Explain how unit costs can be misleading.

  • Discuss how performance measures can affect decision making.

  • Construct absorption and contribution format income statements and identify which is better for decision making.


Questions, Solutions

8 Capital Budgeting (11) - [Wk 11]

Specific Objectives:

  • Describe capital budgeting decisions and use the net present value (NPV) method to make such decisions.

  • Calculate the NPV difference between two projects using both the total project and differential approaches.

  • Identify relevant cash flows for NPV analyses.

  • Compute the after-tax net present values of projects.

  • Explain the after-tax effect of cash of disposing of assets.

  • Compute the impact of inflation on a capital-budgeting project.

  • Use the payback model, the accounting rate-of-return model, the internal rate of return, IRR model and compare them with the NPV model.



Questions, Solutions







    Lectures will be the forum for the introduction and general discussion of each topical area. Although lecture slides will be made available to students, they can be obtained from the course's web site (see above & below). To assimilate the information more readily and in turn enhance better quality discussions, students are advised to read the relevant chapters prior to attending the lecture at which it will be discussed. The lecturer will assume that this has been done.

    Tutorials will follow 1 week after each lecture and will be the forum for students to cement the material covered in those lectures via the working of tutorial questions. These tutorial questions will comprise of computational problems, essays and cases taken from the end-of-chapter exercises. The selected tutorial questions will be made available on the course's web site as well as distributed in class. The solutions will be made available before hand on the course's web site to facilitate a student-centered learning approach. Note, it is IMPORTANT that even though the solutions are available before hand, students must attempt the questions first, then look at the solutions. Do NOT cheat yourself!



Type Date Date Topics Length Format Weight (%)
Test #1 Week# 5   1-3 1 1/2  hours 40 mcqs  20
Assignment #2* Week#11: Monday, November 10, 2003 @ 8:00pm 4 n/a Group Assignment*  20
Final Exam To be announced 5 - 8 2 hours
Section A - Compulsory Question 1 Capital Budgeting
Section B - Choose One Question 2 Relevant Costing - Dropping a department
Question 3 Relevant Costing - Make or Buy
Section C - Choose One Question 4 Flexible Budgeting
Question 5 Variance Analysis



        TBA - To be announced

    * - More details on these assessments will be provided throughout the course and are all subject to change.