1

ment Accounting

ed to help is intended to

could be any examination session.

LLABUS AND

inks eding o

nneolid l

here there is t link and no required underpinnin

are shown as dotted line arrows. The relational cates where you are expect

here it woefore

f the syllabus

the broadest sense the capabilities to be developed within the paper.

ral mai the syllabus and study

guide into discrete sections.

betwe the syllabus an

should be used as an aid to planning teaching anlearning in a structured way. Syllabus rationale This is a narrative explaining how the syllabus is structured and how the main capabilities are linked. The rationale also explains in further detail what the examination intends to assess and why.

Detailed syllabus

main capabilities to subject areas. This is

detailed study guide.

llabus

This section briefly explains the structure of the examination and how it is assessed.

ts and ould use as the

ion and materials

detail of the ively identifies what

ation session. ection and

vided into sections entified in the

ivided into subject capabilities included

bject areas are broken hich describe the detailed

outcomes that could be assessed in examinations. outcomes are described using verbs

nts to ctual level at

e demonstrated

rtner - content (ALP- e programme through which ACCA approves

learning materials from high quality content ned to support study towards ACCAs

ed Learning Partner Media. In addition,

ved Learning

For information about ACCA's Approved Learning Partners - content, please go ACCA's Content Provider Directory. The Directory also lists materials by Subscribers, these materials have not been quality assured by ACCA but they may be useful reading. You will also find details here of Additional Reading which the

Manage (F2/FMA) December 2011 This syllabus and study guide is designwith teaching and learning andprovide detailed information on whatassessed in

THE STRUCTURE OF THE SYSTUDY GUIDE Relational diagram with other papers This diagram shows direct and indirect lbetween this paper and other papers precfollowing it. Some papers are directly underpiby other papers. These links are shown as sarrows. The links between papers wonly an indirec

r study guide which comprehend s

ine could be assessed in any examin

g breakdown of the syllabus. It is di

diagram therefore indi ed re d

to have underpinning knowledge and w uld areas which relate to the sub-

be useful to review previous learning bundertaking study.

Overall aim o

of the This explains briefly the overall objectivepaper and indicates in

Main capabilities This papers aim is broken down into seve n ACCA's Approved Learning Pa

capabilities which divide

Relational diagram of main capabilities This diagram illustrates the flows and links en ACCA has one Platinum Approv

the main capabilities (sections) of d content which is BPP Learning

d Partners - content.

This shows the breakdown of the (sections) of the syllabus inthe blueprint for the

Approach to examining the sy

Study Guide This is the main document that studenlearning and content providers shbasis of their studies, instructrespectively. Examinations will be based on the

The study guide is a precise refl

based on the main capabilities idsyllabus. These sections a

in the detailed syllabus. Sudown into sub-headings w

Theseindicating what exams may require studedemonstrate, and the broad intellewhich these may need to b(*see intellectual levels below). Learning Materials

c) is th

providers desigqualifications.

there are a number of Gold Appro

2

e useful supplementary reading for students.

found hhttp://www.accaglobal.com/learningproviders/alpc/c

Examiner has suggested may b

ACCA's Content Provider Directory can be ere

ontent_provider_directory/search/. Relevant articles will also be publishedAccoun

in Studentant.

TUAL

ssivelyills

f levels . These relate

nd otark, thes

t the n Accounta

t, at the level at

Diploma (the le)

to Professional

uides assess both knowledge and skills. Therefore a clear distinction

assessedge and skills and in assessing their

ess denoted is

ARNIN

he FIA syllabuses the approximate number oeeds to

the credvalue of the Qualifications and Credit Framework (QCF) UK, units which make up the syllabus. For FMA, Foundations in Management Accounting, the total learning hours or credit value of the syllabus is 14 credits or 140 hours which includes direct tuition time, self study, revision and assessment time. For QCF registered learners in England, Wales and Northern Ireland, passing the exam related to the

above syllabus gives credit for the following QCF

s

naging financial e

g financial performance

ries within and les and levels.

100% compulsory

All FIA examinations are assessed by two-hour paper based and computer based

amination papers is

ESSMENT

ludes knowledge, s, and concepts as

t and tax papers, rwise, ACCA will

nce a year to gulations and legislation

ed within identified ions.

issued or legislation passed

annually, will be llowing year to May

to the paper (where .

passed in dates may be

examinable even if the effective date is in the future. The term issued or passed relates to when regulation or legislation has been formally approved.

The term effective relates to when regulation or legislation must be applied to entity transactions and business practices. The study guide offers more detailed guidance on the depth and level at which the examinable

t TRUCTURE

LEVEL OF ASSESSMENTS INTELLECDEMAND ACCA qualifications are designed to progrebroaden and deepen the knowledge and skdemonstrated by the student at a range otheir way through each qualificationintellectual levels as designated by the UK qualifications and credit framework (QCF) aqualifications frameworks. As a benchmlevels progress from GCSE equivalent aIntroductory level of the Foundations i(FIA) programme, to A level, or its equivalenIntermediate level and to first year degree

q

on

the breadth of each syllabus.

to examinations.

her The pass mark for all FIA ex

e

ncy

50%. GUIDE TO EXAMINATION ASS

ACCA reserves the right to examine anything contained within any study guide at any examination session. This inctechniques, principles, theoriespecified.

the Advanced level. The AdvancedSkills module plus professional Ethics Moduwithin the ACCA Qualification is equivalentundergraduate degree level and the level is benchmarked at Masters level. Throughout, the study g

is ing

For the financial accounting, audiexcept where indicated othepublish examinable documents oindicate exactly what recould potentially be assessexamination sess

drawn, within each subject area, between knowlapplication within an accounting or busincontext. The assessment of knowledge is a superscriptK and the assessment of skillsdenoted by the superscriptS. VALUE OF ASSESSMENTS GUIDED LEHOURS For t

by

G

Examinations regulation on or before 30th Septemberassessed from June 1st of the fo31st of the year after. Please refer

f standard learning hours that a candidate ncommit to each examination is based on

it

Regulation issued or legislationaccordance with the above

units: Principles of budgeting Drafting budget Principles of ma performanc Measurin

GUIDE TO EXAM S The structure of examinations vabetween moduThe FIA examinations containuestions to encourage candidates to study across

examinable documents for therelevant) for further information

3

guide d in conjunction with the

examinable documents list.

documents will be examined. The studyshould therefore be rea

4

Qualification structure

ucture requires candidates who wish to gain the Diploma in Accounting and Business to pass the F1/FAB, the F2/FMA and the F3/FFA examinations and successfully complete the Foundations in Professionalism module.

so that a

Introductory, Intermediate and Advanced, However, entry is possible at any point. Students are reco nded to e FIA at the le ich is most appropriate to their needs and abilities and to take examinations in order, but this is not a requirement.

The qualification str

Diploma in Accounting and Business

F2/FMA F3/FFA F1/FAB FiP*+ =+ +

Syllabus structure The FIA suite of qualifications is designed student can progress through three discrete levels;

* Foundations in Professionalism

mme nter vel wh

P5

F2

MA1

MA2

FMA

ACCA P3

F5

FIA

5

Syllabus

anagement information in an on to support management in planning

making.

per FMA/F2, Management ments o to make

The syllabus starts by introducing the nature, the d the

ich are essential for any management accountant . The syllabus then looks at the preparation and use of budgeting and standard costing and variance analysis as essential tools for planning and

syllabus concludes n to measuring and monitoring

the performance of an organisation

this paper, candidates

d purpose of

management information

unting techniques

C Prepare budgets for planning and control

Compare actual costs with standard costs and analyse any variances

E Analyse, interpret and monitor business

formance.

RELATIONAL DIAGRAM OF MAIN CAPABILITIES

AIM To develop knowledge and understandinproviding basic m

g of

organisatiand decision- RATIONALE The syllabus for PaAccounting, introduces candidates to elemanagement accounting which are usedand support decisions.

f

B Explain and apply cost acco

source and purpose of cost accounting ancosting techniques used in business wh

controlling business costs. The with an introductio

MAIN CAPABILITIES On successful completion of should be able to:

A Explain the nature, source an

D

per

The nature, source and purpose of management information (A)

Budgeting (C)

Cost accounting techniques (B)

Performance measurement

(E)

Standard costing (D)

6

DETAIL A The nature, source and purpose of

ion

for management

2. Sources of data

3 Cost classification

and methods.

rial, labour and overhea

2. Absorption and marginal costing

nting methods

g principles

urpose of budgeting

2. Statistical techniques

3. Functional budgets

s

discounted cash flow

rting 7. D Standard costing 1 Standard costing system 2 Variance calculations and analysis 3 Reconciliation of budgeted and actual profit

ent

ent - overview

ent - application

ncement 4. Monitoring performance and reporting

HE SYLLABUS

per-based The examination

wo mark questions. ACCA will introduce longer style questions in the future and as such approved learning content materials will contain some of these longer style questions. ACCA will provide sufficient notice on when the longer style questions will be introduced.

ED SYLLABUS

management informat

1. Accounting

4 Presenting information

B Cost accounting principles

1. Accounting for mate ds

APPROACH TO EXAMINING T The syllabus is assessed by a two hour paor computer-based examination. will consist of 50 t

3. Cost accou 4. Alternative cost accountin

C Budgeting

1. Nature and p

4. Flexible budget

5 Capital budgeting and

6 Budgetary control and repo

Behavioural aspects of budgeting

E Performance measurem 1. Performance measurem

2 Performance measurem 3 Cost reductions and value enha

7

Study Guide A AND PURP

MATION

nting ent accounti

c) esses of planning, decision making and control.[k]

d)

) forma

attributes of good

.[k]

e t ce for

2. Sources of data

w

l nd price list.[k]

ub

the internet) .[k]

pact of general economenvironment on costs/revenue.[k]

d) Explain sampling techniques (random,

systematic, stratified, multistage, cluster and quota) .[k]

e) choose an appropriate sampling method in a

specific situation.[s]

: Derivation of random samples will not be examined)

government, trade associations and the al press.[K]

production and non-

rative, selling, distribution and finance.[k]

nts of production r and overheads.[k]

of the distinction on production costs

entories.[k]

xamples

product/service costs including by function, nd variable, stepped

emi variable costs.[s].

of codes in

g) Describe and illustrate, graphically, different types of cost behaviour.[s]

Use high/low analysis to separate the fixed and al costs including

mi variable and stepped variable cost per

]

near functions and equations.[s]

j) Explain and illustrate the concept of cost

objects, cost units and cost centres.[s]. k) Distinguish between cost, profit, investment and

revenue centres.[k]. l) Describe the differing needs for information of

cost, profit, investment and revenue centre managers.[k]

THE NATURE, SOURCE OSE OF

f) Describe sources of information from

MANAGEMENT INFOR

1. Accounting for management a) Describe the purpose and role of cost and management accounting within an

organisation.[k]

b) Compare and contrast financial accou with cost and managem ng.[k]

b) Describe the different elements of non production costs- administ

Outline the managerial proc

Explain the difference between strategic,

d operational planning.[k] tactical an

te Distinguish between data and in ion.[k]

d) Explain the importance

between production and nwhen valuing output and inv

f) Identify and explain the information g) Explain the limitations of managem information in providing guidan managerial decision-making.[k]

nd

a) Describe sources of information from

and outside the organisation (including ithin

f) Explain and illustrate the use

categorising transaction.[k]

government statistics, professionaassociations, quotations a

or trade

h)

b) Explain the uses and limitations of pinformation/data (including information

lished variable elements of totsituations involving se

from fixed costs and changes in theunit.[s

c) Describe the im ic

i) Explain the structure of li

(Note

financi

3. Cost classification a) Explain and illustrate

production costs.[k]

c) Describe the different eleme

cost- materials, labou

e) Explain and illustrate with eclassifications used in the analysis of the

irect and indirect. fixed afixed and s

8

4. Presenting information

formation in suitable formats

n using tables, charts and graphs (bar charts, line graphs, pie charts

c) Interpret information (including the above ed in

ent reports.[s]

B COST ACCOUNTING METHODS AND

1. nd overheads a

( and ering,

ls from

sed to ical and book inventory an

losses.[k]. ( t the entries and balanc

cos s tory (in

ntory)[s]

eorder

e pl

( ations to minimise icosts when inventory is gradually

]. ate m

ere me is constant.[s]

ventory aO and

average methods.[s]

b) Accounting for labour

(i) Calculate direct and indirect costs of labour.[s]

(ii) Explain the methods used to relate input labour costs to work done.[k]

(iii) Prepare the journal and ledger entries to record labour cost inputs and outputs.[s]

uneration methods: s, piecework systems

entive

analyse the costs urnover.[s]

late labour efficiency, capacity and production volume ratios.[s]

the entries in the labour

ads rent treatment of direct and .[k] edures involved in

mining production overhead

ortion production entres using an

ortion service cost centre costs to tres (using the

ere service cost [s]

es for absorption rates.[s]

al and ledger entries for manufacturing overheads incurred and

ate and explain the under and over rheads.[s]

rginal costing

and apply, the [s]

discuss the effect of absorption and marginal costing on inventory

ation.[s]

late profit or loss under absorption and marginal costing.[s]

d) Reconcile the profits or losses calculated under absorption and marginal costing.[s]

e) Describe the advantages and disadvantages of

absorption and marginal costing.[k] 3. Costing methods a) Job and batch costing:

a) Prepare written reports representing

management inaccording to purpose.[s]

b) Present informatio

and scatter graphs) .[s].

tables, charts and graphs) presentmanagem

SYSTEMS

Accounting for material, labour a

) Accounting for materials i) Describe the different procedures

documents necessary for the ordreceiving and issuing of materia

[k]inventory. (ii) Describe the control procedures u

monitor phys d (vi) Prepare journto minimise discrepancies and

iii) Interpre es in the absorbed.[s]

(vii) Calculmaterial inventory account.[s].

(iv) Identify, explain and calculate the ordering and holding invenbuffer inve

t ofcluding

absorption of ove 2. Absorption and ma

(v) Calculate and interpret optimal rquantities.[s]

(vi) Calculate and interpret optimal reoquantities when discounts ap [s]

vii) Produce calcul

rd ra) Explain the importance of,

concept of contribution.y. .

nventory b) Demonstrate and

replenished.[s

(viii) Describe and apply appropri ethods valuation and profit determin

for establishing reorder levels whdemand in the lead ti

(ix) Calculate the value of closing inmaterial issues using LIFO, FIF

nd

(iv) Describe different remtime-based systemand individual and group inc

[k]schemes. (v) Calculate the level, and and causes of labour t(vi) Explain and calcu (vii)Interpret account.[s]

c) Accounting for overhe

(i) Explain the diffeindirect expenses

(ii) Describe the procdeterabsorption rates.[k]

(iii) Allocate and appoverheads to cost cappropriate basis.[s]

(iv) Reappproduction cost cenreciprocal method whcentres work for each other)

(v) Select, apply and discuss appropriate bas

c) Calcu

9

( e characteristics of job and

e use of job priate.[k] ts in job

costing situations. [s] (iv) Establish job and batch costs from given

[s]

b

( process

( he use of [s]

d ns.[k]

process

g normal gains

( d explain the concept of

( out of a

( process accounts in situ

(

(x) Distinguish between by-products and joint

oint products at the [s]

situations roducts

( olving work-in-process and losses

c) Service/operation costing

(i) Identify situations where the use of service/operation costing is appropriate.[k]

(ii) Illustrate suitable unit cost measures that may be used in different service/operation situations.[s]

(iii) Carry out service cost analysis in simple service industry situations.[s]

4 Alternative costing principles

sting (ABC), target g and total quality

management (TQM) as alternative cost

get costing and life cycle ting from the traditional costing techniques

(note: calculations are not required) .[k]

C BUDGETING

eting

a) Explain why organisations use budgeting.[k]

the planning and control cycle in an [k]

ive procedures used in ]

cluding sources of relevant data, planning and agreeing draft budgets and

ow they link to

disadvantages of d to estimate the fixed

ent of costing.[k].

rams and lines of best

ation icient of

.[k] (ii) Calculate and interpret correlation

coefficient and coefficient of determination.[s]

(iii) Establish a linear function using regression analysis and interpret the results.[s]

d) Use linear regression coefficients to make

forecasts of costs and revenues.[s]

i) Describe thbatch costing.[k]

ii) Describe the situations where th(or batch costing would be appro

(iii) Prepare cost records and accounand batch

information.

) Process costing i) Describe the characteristics of

costing.[k] ii) Describe the situations where t

process costing would be appropriate.(iii) Explain the concepts of normal an

abnormal losses and abnormal gai(iv) Calculate the cost per unit of

outputs.[s] (v) Prepare process accounts involvin

and abnormal losses and abnormvi) Calculate an

al .[s]

organisation.

equivalent units.[s] vii) Apportion process costs between work

remaining in process and transfersprocess using the weighted average and FIFO methods.[s]

viii)Prepare ations purpose of forecasts and hbudgeting).[k]

where work remains incomplete.[s]

ix) Prepare process accounts where losses and gains are identified at different process.[s]

stages of the 2. Statistical techniques

products.[k] (xi) Value by-products and j

point of separation.(xii) Prepare process accounts in

where by-products and/or joint poccur. [s]

Situations invin the same process are excluded).

a) Explain activity based co

costing, life cycle costin

management techniques.[k] b) Differentiate ABC, Tar

cos

1. Nature and purpose of budg

b) Describe

c) Explain the administrat

the budgeting process.[k

d) Describe the stages in the budgeting

process ( in

a) Explain the advantages and using high low methoand variable elem

b) Construct scatter diag

fit.[s] c) Analysis of cost data.

(i) Explain the concept of correlcoefficient and coeffdetermination

10

torical and forecast data for p

s and disadvantages of

g) Describe the product life cycle and explain its

nciples of time series analysis al variation and

random elements) .[k]

erages.[s]

use of

ditive budget

antages of

analysis[k]

bers [k]

bers for one or

r spreadsheet system.[k]

uter heir use in cost and

management accounting.[s]

ance of principal budget factor in constructing the budget.[k]

b) Prepare sales budgets[s] c) Prepare functional budgets (production, raw

materials usage and purchases, labour, variable and fixed overheads) [s]

d) Prepare cash budgets[s]

udgets (Income statement and statement of financial position) [s]

ustrate what if analysis and nario planning [s]

xible budgets in

ges of fixed budgets in

[s]

el of volume[s]

ash flows

a) Discuss the importance of capital investment

uish between capital and [k]

consider and the steps involved in the preparation of a capital

d) Explain and illustrate the difference between st, and between t rates[s]

rate compounding and discounting[s]

tion between cash flow and of cash flow to capital

ent appraisal[k]

g) Identify and evaluate relevant cash flows for individual investment decisions.[s]

h) Explain and illustrate the net present value

(NPV) and internal rate of return (IRR) methods of discounted cash flow[s]

i) Calculate present value using annuity and perpetuity formulae[s]

e) Adjust his rice e) Prepare master bmovements.[s]

f) Explain the advantagelinear regression analysis.[k]

importance in forecasting.[k] h) Explain the pri

(cyclical, trend, season

i) Calculate moving av

j) calculation of trend, including the regression coefficients .[s]

k) Use trend and seasonal variation (adand multiplicative) to make forecasts.[s]

l) Explain the advantages and disadvtime series

planning and control[k] b) Define and disting

m) Explain the purpose of index num

n) Calculate simple index nummore variables.[s]

o) Explain the role and features of a compute

p) Identify applications for comp

spreadsheets and t

3. Budget preparation a) Explain the import

f) Explain and ill

sce

4. Flexible budgets a) Explain the importance of fle

control[k]

b) Explain the disadvantacontrol[k]

c) Identify situations where fixed or flexible budgetary control would be appropriate

d) Flex a budget to a given lev

5. Capital budgeting and discounted c

revenue expenditure c) Outline the issues to

expenditure budget[k]

simple and compound interenominal and effective interes

e) Explain and illust

f) Explain the distinc

profit and the relevance investm

11

j) R and payback (discounte

k) IRR and payback calculations of investment viability[s]

a ple variances between flexed , costs

and profits[s]

Discuss the relative significance of variances

c) iances[k]

pt of responsibility accounting and its significance in control[k]

uncontrollable costs[k]

f) Prepare control reports suitable for presentation mmendation of

tion [s]

b) Identify factors in a budgetary planning and [s]

c) Explain the impact of targets upon motivation[k]

d) Discuss managerial incentive schemes[k]

es and disadvantages oparticipative approach to budgeting[k]

f) Explain top down, bottom up approaches to budgeting[k]

D STANDARD COSTING 1. Standard costing systems a) Explain the purpose and principles of standard costing. [k]

difference between absorption costing[k]

rd cost per unit under rginal costing[s]

analysis

.[s]

, price and usage variance.[s]

and efficiency

[s]

total, expenditure fficiency variance[s]

d overhead total, expenditure me, capacity and

[s]

g) Explain factors to consider before investigating auses of the

es and recommend control action.[s]

standard figures where the variances are given.[k]

3 Reconciliation of budgeted and actual profit

a) Reconcile budgeted profit with actual profit rption costing.[s]

fit or contribution with tual profit or contribution under standard

marginal costing.[s] E PERFORMANCE MEASUREMENT 1. Performance measurement overview a) Discuss the purpose of mission statements and their role in performance measurement[k]

Calculate NPV, IR d and non-discounted) [s]

Interpret the results of NPV,

6. Budgetary control and reporting

Calculate sim) budget, fixed budget and actual sales

b

) [k]

Explain potential action to eliminate var

d) Define the conce

e) Explain the concept of controllable and

to management. (to include recoappropriate control ac

7. Behavioural aspects of budgeting

a) Explain the importance of motivation in performance management[k]

control system that influence motivation

e) Discuss the advantag f a

b) Explain and illustrate the standard, marginal and c) Establish the standa

absorption and ma

2 Variance calculations and a) Calculate sales price and volume variance

b) Calculate materials total

c) Calculate labour total, rate variance. d) Calculate variable overhead

and e

e) Calculate fixeand, where appropriate, voluefficiency variance.[s]

f) Interpret the variances.

variances, explain possible cvarianc

h) Explain the interrelationships between thevariances .[k]

i) Calculate actual or

under standard abso

b) Reconcile budgeted proac

12

b) ctives and their

c)

nt[k]

d) Explain the impact of government regulation

2 ation a) Discuss and calculate measures of financial

ity, activity ures[s] b) ard nd limitations o

s for faction,

th s critical success factors and key

performance indicators and their link to [k]

d key specific

c) s nomy, efficien

ors for [k]

(iii) establish performance indicators for

ing of each of the efficiency, capacity and activity ratios[k]

e efficiency, capacity and situation[s]

d) Unit ich

itable in contract and process costing environments[k]

e) Resource utilisation (i) describe measures of performance

utilisation in service and manufacturing environments[k]

(ii) establish measures of resource utilisation in a specific situation[s]

(i) calculate return on investment and residual

explain the advantages and limitations of return on investment and residual income[k]

distinguish performance measurement cturing

ies[k]

e measures appropriate for service industries[k]

alue enhancement

a) Compare cost control and cost reduction[k]

b) Describe and evaluate cost reduction

value analysis[s]

non-financial

measures[k]

nd long-term performance[k]

f performance in s[k]

ement of performance in king and public sector

organisations[k]

be used to assess rformance and the practical

problems involved[k] f) Discuss the role of benchmarking in

performance measurement[k] g) Produce reports highlighting key areas for

management attention and recommendations for improvement[s]

Discuss the purpose of strategic andoperational and tactical obje

role in performance measurement[k]

Discuss the impact of economic and market conditions on performance measureme

on g) Quality of service

(i) performance measurement[k]

Performance measurement - applic

performance (profitability, liquid

and gearing) and non financial meas

Perspectives of the balanced scorec(i) discuss the advantages a f

the balanced scorecard[k] (ii) describe performance indicator

financial success, customer satisprocess efficiency and grow [k]

(iii) discus

objectives and mission statements(iv) establish critical success factors an

performance indicators in asituation[s]

Economy, efficiency and effectivenes(i) explain the concepts of eco

and effectiveness[k] cy

b) Discuss the relationship between short-term a(ii) describe performance indicat

economy, efficiency and effectiveness

economy, efficiency and effectiveness in a specific situation[s]

(iv) discuss the mean

(v) calculate thactivity ratios in a specific

costs (i) describe performance measures wh

would be su

f) Profitability

income[s]

(ii)

issues in service and manufaindustr

(ii) describe performanc

3. Cost reductions and v

methods[s]

c) Describe and evaluate 4 Monitoring performance and reporting

a) Discuss the importance ofperformance

c) Discuss the measurement oservice industry situation

d) Discuss the measur

non-profit see

e) Discuss measures that may

managerial pe