Budgeting and Managerial Accounting

Knowledge of cost accounting.

Explanatory and active method aimed at understanding theoretical content. This active method is adapted from Team-Based Learning (TBL). This methodology is designed to promote individual learning and cooperation among students and will follow three stages: first, students individually study the theoretical content; then, the teacher presents and clarifies the same content; finally, students demonstrate the acquisition of knowledge by answering questions or solving practical cases in groups.

In part one, it is intended to provide the necessary knowledge for the construction, use and evaluation of management accounting information systems, directed, fundamentally, to information for decision making. The objectives to be achieved, in general, are the following:

Make known and apply the method of cost centers or sections;
Make known and apply new methodologies in the calculation, tracking, analysis and management of costs through activity-based costing;
Characterize and understand the treatment of fixed production costs in a total costing system and in partial costing, showing the differences in results obtained by the alternative use of each one of them;
Recognize the existing relationships between Cost, Volume and Result, and use them in calculating the contribution margin, the critical point of sales, the safety margin and the degree of operational leverage;
Place Management Accounting in the decision-making process, revealing relevant costs and income for certain types of short-, medium- and long-term decisions;
Understand the differences between real costing and costing based on predetermined costs, and apply this method to different types of costs and determine and analyze the main deviations.

In part two, the main objectives are:

Develop knowledge and techniques related to the preparation of budgets by functions and their control, in conjunction with strategic and operational planning, with a view to using the budget as a tool for forecast management

Determination and analysis of deviations in all operational areas of a profit-oriented organization, be it industrial, commercial or services;
Establish the methodology and precautions for implementing a budget system.
Competencies to achieve:

Upon completion of the UC, the student must obtain the following general skills:
• Capacity for analysis and synthesis and decision making;
• Critical and self-critical capacity;
• Ability to understand theory and apply it to practice;
• Skills to work in a group.
And the following technical skills:
• Understand and use accounting systems for calculating costs to value inventories, for planning and management control and for decision-making based on economic rationality;

• Understand budget management as a short-term management tool resulting from the strategic and operational planning process and the management control process;

• Know how to prepare operational and financial budgets, and forecast financial statements, income statement and balance sheet;
• Know how to calculate and analyze budget deviations by responsibility and by cause, know how to prepare control reports and know how to dialogue.

PART 1 – MANAGEMENT ACCOUNTING AS A SOURCE OF INFORMATION FOR DECISION MAKING

I – COSTING SYSTEMS
1.1. Alternative costing systems
1.2. Methods of handling fixed production costs and effects on results
1.2.1. Classification of costs in terms of their behavior in the face of variations in the level of activity
1.2.2. Full Total Costing
1.2.3. Rational Costing
1.2.4. Variable Costing
1.2.5. Costing alternatives and effects on the result

II – COSTING BASED ON COST CENTERS (HOMOGENEOUS SECTIONS)
2.1. – Functional Division of Costs
2.2. – Cost Centers. Main and Auxiliary Centers
2.3. – Distribution of Costs by the Centres. Refunds.
2.4. – Analysis of Some Natures of Costs
2.5. – Production Cost Calculation Maps

III – ACTIVITY-BASED COST: AID TOOL FOR DECISION MAKING
3.1. – Treatment of Costs in Activity-Based Costing
3.2. – Design of an Activity Based Costing System (ABC)
3.3. – The Mechanics of Activity Costing
3.4. – Activity Based Management (ABM)
3.5. – Assignment of Costs to Cost Objects
3.6. – Comparison of Traditional and ABC Costing Systems
3.7. – Analysis of the Behavior of Product Costs
3.8. – Costing by Activities and External Reports
3.9. – Simplified Approach to the Activity-Based Costing System
IV – COST-VOLUME-RESULT RELATIONSHIPS
4.1. – The contribution model
4.2. – Fundamentals and assumptions of Cost-Volume-Result Analysis (CVR)
4.3. – CVR Analysis in Variable Costing
4.4. – The sales mix concept
4.5. – CVR Analysis Assumptions

V – RELEVANT COSTS AND INCOME FOR DECISION MAKING
5.1. The decision making process
5.2. The approach to relevant costs and income

VI – METHODS OF MEASURING COSTS AT THE TIME OF CALCULATION: ACTUAL COSTS AND PRE-DETERMINED COSTS
6.1. – Actual costing
6.2. – Normal costing
6.3. – Standard Costing
6.3.1. – Concept, typology and standard cost objectives
6.3.2 – Standard cost deviations
6.3.3. – Advantages and usefulness of standard costs

PART 2 – BUDGET MANAGEMENT

VII – FUNCTIONS OF MANAGEMENT AND BUDGET MANAGEMENT
7.1. The nature and functions of Management.
7.2. Nature and characteristics of Planning
7.3. The nature of Budget Management.

VIII – THE BUDGET PREPARATION PROCESS
8.1.Budgeting by Functions. Budget articulation and preparation of the Annual Budget.
8.2. Sales Budget and Commercial Costs.
8.3. The Production Program and Budget. Standard costs.
8.4. Procurement and Inventories Budgets.
8.5. Investment Budget.
8.6. General Expenditure Budget – the “zero-based” budget.
8.7. Summary Budgets.

IX – THE BUDGET CONTROL PROCESS
9.1. Basic aspects of Budgetary Control
9.1.1. Budgeting and uncertainty. Construction of the Adjusted Budget
9.1.2. Determination of significant deviations – control by exception.
9.1.3. The conditions of effectiveness of budgetary control
9.2. Calculation and analysis of deviations
9.2.1. Deviations by liability
9.2.2. The integration of deviations – the deviation of Results
9.3. Deviations by Cause
9.3.1. volume deviation
9.3.3. Efficiency deviation
9.3.4. price deviation

X – THE IMPLEMENTATION OF BUDGET MANAGEMENT

10.1. Behavioral aspects of Budget Management.
10.2. The implementation of Budget Management.
10.2.1 Methodology for implementing a budget system.
10.2.2. Implementation difficulties – mistakes to avoid.
10.2.3. Budget animation and the role of the “Controller”.
10.3 Budget Management and Benchmarking
10.3.1. Benchmarking in budgeting by responsibility centers
10.3.2. Benchmarking in establishing evaluation standards

NAO

Bibliografia de suporte às aulas:

• Saraiva, A., Rodrigues, A., Coimbra, C., Fantasia, M. e Nunes, R., (2018), Contabilidade de Gestão – Métodos de Custeio e Valorização de Inventários, 1ª edição, Editora Almedina, Coimbra.
• Saraiva, A., Rodrigues, A., Coimbra, C., Fantasia, M. Correia, E e Nunes, R., (2022), Contabilidade de Gestão – Métodos de Custeio e Valorização de Inventários, – Exercicios -2ª edição, Editora Almedina, Coimbra.
• Franco, Victor et al. (2006). Contabilidade de Gestão – Volume II, Orçamento Anual e Instrumentos de Avaliação do Desempenho Organizacional,1ª edição, Lisboa: Editora Publisher Team.

Bibliografia de aprofundamento:

• Drury, Colin: Management Accounting for Business (2021), 11th edition. South-Western Cengage Learning ;
• Burns, John et al. (2013), Management Accounting, London: McGraw-Hil.
• Caiado, António Pires (2020). Contabilidade Analítica e de Gestão, 9ª Ed. Áreas Editora.
• Charles T. Horngren, Srikant M. Datar, Madhav V.Rajan (2017): Cost accounting a Managerial Emphsis15/E. Prentice Hall, 16th edition
• Drury Colin: Management Accounting for Business.(2019).South-Western, Cengage Learning, 2019, 7th edition or 6th , 5th edition
• Ferreira, Domingos et al. (2019). Contabilidade de Gestão – Estratégia de custos e dos resultados, 2ª ed., Rei dos Livros.
• Garrison, Ray e Noreen, Eric (2013). Contabilidade Gerencial, 14ª Edição, Rio de Janeiro: LTC Editora.
• Hansen & Mowen (2000). Management Accounting, 5th ed., South-Western College Publishing.
• Horngren, Charles et al. (2012). Cost Accounting: A Managerial Emphasis, 14ª Ed., Nova Jersey: Prentice Hall International Editions, Upper Saddle River.