Management Accounting

Financial Accounting

Lecture on theoretical contents:
Active and interrogative in the resolution and discussion of practical cases

a.1 Objectives:

Provide the student with an understanding and knowledge of the process of formation of costs and results in organizations, as well as the accounting procedures for their determination, analysis and use in the valuation of inventories, in the provision of information for planning and control, as well as in decision-making. Thus, the objectives to be achieved during this semester are the following:

· Recognize the objectives and scope of Management Accounting in organizations;

· Enunciate and apply the basic concepts that support Management Accounting;

· Know the main differences and complementarities between the various systems of interconnection  and coordination between Financial Accounting and Management Accounting;

· Knowing how to apply the various ways of classifying different types of costs;

· Know the components that comprise, in absorption costing, the full cost of products and services;

· Identify the different manufacturing regimes and use the most appropriate cost accumulation systems, namely production order, process and mixed costing;

· Knowing how to distribute indirect costs, using the Cost Center method, distinguishing, among others, main and auxiliary centers;

· Use the Activity-Based Costing (ABC) system, as an alternative to traditional costing systems, from the perspective of sharing and imputing indirect costs and from the perspective of value creation;

· Know the main problems of joint production and proceed with the valuation of joint products;

· Know the various inventory costing systems, in particular the complete, variable and rational total costing system;

· Recognize the existing relationships between Cost, Volume and Result, (C-V-R) and use this model in short-term planning.

a.2 Skills to achieve

After completing the UC, the student must obtain the following general skills:

· Capacity for analysis, synthesis and decision-making;

· Critical and self-critical capacity;

· Ability to understand theory and apply it to practice;

· Ability to work in groups.

And the following technical skills:

· Understand cost accounting systems for valuing inventories, for management planning and control, and for decision-making;

· Transpose these technical skills to the interpretation of the information provided by Management Accounting.

1. Management Accounting

1.1. Scope and objectives of Management Accounting
1.2. Income Statement: by Nature and Functions
1.3. Articulation Systems between Financial Accounting and Management Accounting
1.4. Recent Developments in Management Accounting

2. Fundamental Concepts of Management Accounting

2.1. Costs/expenses, expenses and payments versus Income/Income, revenues and receipts
2.2. Cost Objects, Production Cost, Complex Cost and Economic-Technical Cost
2.3. Product Costs and Expenses for Periods
2.4. Classification of costs/expenses and income/income: Control and Decision Making
2.5. Relevant Costs and Income for Decision Making

3. Production cost components

3.1. The subjects
3.2. the workforce
3.3. General (indirect) production costs
3.4. Costs of finished production and production in process of manufacture
3.5. Extra production costs

4. Inventory Costing Systems

4.1. Alternative Costing Systems
4.2. Complete Total Costing
4.3. Rational Costing
4.4. Variable Costing
4.5. Costing alternatives and effects on income

5. Costing based on Cost Centers

5.1. Functional division of costs
5.2. Cost centers. Main and Auxiliary Centers
5.3. Primary and secondary breakdown of costs by Centres. Reciprocal benefits.
5.4. Cost Calculation Maps

6. Activity Based Costing (ABC)

6.1. ABC and cost center-based costing
6.2. Activities and expense drivers
6.3. Cost Calculation Maps

7. Calculation of Production Cost and Manufacturing Regimes7.1. manufacturing regimes

7.2. Direct Method (order-to-order or production-order costing)
7.3. Indirect Method (process costing)
7.4. Mixed Method

8. Joint Production

8.1. Reasons for sharing joint costs
8.2. Types of joint products: co-products, by-products and waste
8.3. Criteria for sharing joint costs by co-products
8.4. Criteria for sharing joint costs between by-products and waste.

9. Cost-Volume-Profit Relationships

9.1. Relationships between costs and volume
9.2. Cost Behavior
9.3. The contribution model
9.4. CVP Analysis in Variable Costing
9.5. The sales mix concept
9.6. CVP Analysis Assumptions

Assessment may alternatively take the form of:
1. Periodic Assessment – Tests
2. Periodic Assessment – Tests and Assignments
3. Assessment by Exam.

1. Periodic Assessment – Tests (AP-T)

This assessment system consists of three written tests (P1, P2, and P3) to be taken during the semester, on dates to be set by the teaching team and communicated to students in the first week of classes. The following rules apply to this assessment system:

1.1. Each written test will be graded on a scale of 0 to 20, rounded to four decimal places;

1.2. For each written test, registration within the deadlines to be defined is mandatory if requested by the teaching team;

1.3. The first written test will account for 30% of the final mark, and the last two will each account for 35%, so the final mark in this assessment system (AP) will be obtained using the following formula:

AP = 30%*P1 + 35%*P2 + 35%*P3

1.4. A minimum grade of 9 is required in each of the tests;

1.5. Students will not pass under this assessment system if one or more of the following conditions apply:

AP<9.5 or P1<9 or P2<9 or P3<9 or Attendance <90%.

1.6. In the case of AP ≥ 9.5 (and P1≥9, P2≥9, and P3≥9), the student will pass and be awarded a final grade equal to AP rounded to two decimal places;

1.7. If the final grade (AP) is equal to or higher than 16 points, this grade may have to be validated by means of an oral examination, which will result in a final grade between 16 points and the grade obtained (AP);

1.8 Mini tests may also be carried out in class, the average grade of which, if higher than 15 points, excluding the two lowest grades, will result in a 5% bonus on AP (AP = 30%*P1 + 35%*P2 + 35%*P3). Whether or not these mini tests are carried out will depend on student participation and the number of students per class who attend classes regularly.

2. Periodic Assessment – Tests and Assignments (AP-T&T)

The following rules apply to this modality:

2.1. All rules established in the previous modality (AP-T);

2.2. Students will complete, in groups or individually, a total of 3 assignments, to be submitted on the Inforestudante platform (Assignment Submission) by the stipulated dates and previously communicated through a notification on Inforestudante;

2.3. For each working group, only one member of the group should respond to this survey, indicating the full name and student number of all members of the group (including the member responding);

2.4. Each group may consist of a maximum of three students;

2.5. Only groups registered by the deadline will be considered;

2.6. Groups must complete all assignments;

2.7. The group(s) called upon to present their work will be selected at random in each class;

2.8. If a selected group is unable to present their work in that class, that group will be disqualified and excluded from this assessment tool, losing any points earned up to that date;

2.9. If the situation described in the previous point occurs, another group will be called to present the work, applying the same rules;

2.10. Each work presented will receive a score of Zero Points (if it does not meet the minimum quality requirements) or One Point (if it meets those minimum requirements);

2.11. If the work selected for presentation does not meet the minimum quality requirements, another group will be chosen (at random) to present their work, until a work that meets those requirements is presented;

2.12. Work produced by groups that are not called upon to present it will be awarded one point, provided that it has been submitted to the platform in good time and meets the minimum quality requirements;

2.13. Only total scores equal to three points will be considered for assessment purposes, with a
15% bonus applied to the test score (rounded to two decimal places and up to a limit of 20.00 points);

2.14. If the final grade (AP) is equal to or higher than 16 points, this grade may have to be validated by means of an oral examination, which will result in a final grade between 16 points and the grade obtained (AP);

Notes:

1) The minimum compulsory attendance for the two assessment systems mentioned above is 90%, calculated as follows:

Attendance = Number of times the student attended / (number of classes taught - number of optional classes*)

* such as question and answer sessions or revision classes, provided that the teacher has communicated that these classes are optional

2) In order for each member of the working groups referred to in Point 2 (Periodic Assessment - Tests and Assignments) to obtain the score (1 point per assignment), it will be necessary for that student to correctly answer all the questions asked by the teacher during the presentation of the assignment.

3. Assessment by Examination

3.1. Under this assessment system, students will take a written examination (on the date to be established in the examination calendar);

3.2. Students will pass the examination if they obtain a mark of 10 or above;

3.3. If the grade obtained in the written exam is equal to or higher than 16 points, this grade may have to be validated by means of an oral exam, which will result in a final grade between 16 points and the grade obtained in the written exam.

NAO