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ACCA F2

Management Accounting (MA)

管理会计

ACCA Lecturer: Belinda Qiu

Copyright © ACCAspace.comACCAspace 中国ACCA特许公认会计师教育平台 2

Part A

7. Cost classification

7.1 classifying costs （element, nature, function, behavior）

7.2 statement of cost

7.3 cost coding

7.4 analysis of costs into fixed and variable elements(图形，例子，由图

形判断信息，计算)

7.5 cost objects, cost units and cost centers （文字题，判断是哪个center）


Part A

1. Management, Financing & Costing Accounting

2. Managerial process of planning, control and decision-making

3. Data and information

4. Sampling techniques

5. Attributes of good info.---” ACCURATE”+2C

6. Presenting information

7. Cost classification


Part B Cost accounting techniques

I. Accounting for material

II. Accounting for labor

III. Accounting for overheads

IV. Absorption and marginal costing

V. Cost accounting method – job and batch costing

VI. Cost accounting method – process costing

VII. Cost accounting method – service costing

VIII.Alternative cost accounting



1. Ordering, receiving and issuing of materials

Department requires new materials

Purchasing department

Accounting department Suppliers Goods receiving department

Goods receiving department

Purchasing department Accounting department

Purchase requisition (authorized )

Purchase order form Copy Copy

Copy

Goods delivery note (GDN)

Goods received note (GRN)

Ordering & purchasing

Receipt



Issuing inventory:

Material requisition notes: to warehouse department, authorized the storekeeper to release the goods and update the stores record

Material return note: record any unused materials which are returned to stores and update the stores record

Material transfer note: transfer the material from one department to another and update the records



2. Physical inventory and book inventory 2.1 Book inventory –perpetual inventory

2.2 Physical inventory –stocktaking



3. Inventory valuation Specific identification—specific costs are attributable to identified

items of inventory. First-in-first-out (FIFO)

First price in is the first price out. Last-in-first-out (LIFO)

Last price in is the first price out. Weighted average (AVCO)—measure by dividing total cost of

goods available for sale by total number of units for salesmoving (continuous) average & periodic average

Not allowed in IAS 2



Example :

FIFO

LIFO

Weighted average (continuous)

Weighted average (periodic)

Date Content Unit & Cost

201x.09.01 Opening stock 800 units @$10each

201x.09.08 Purchases 600 units @$12each

201x.09.15 Sales 750 units




300 units










Date In Out Balance

201x.09.01

201x.09.08

201x.09.15

201x.09.22

201x.09.28

201x.09.31

800 10 $8000

600 12 $7200

750 10 $750050 10 $500600 12 $7200

800 10 $8000600 12 $7200

50 10 $500250 12 $3000

350 12 $4200

350 11 $3850350 12 $4200350 11 $3850

200 12 $2400 150 12 $1800350 11 $3850










Date In Out Balance

201x.09.01

201x.09.08

201x.09.15

201x.09.22

201x.09.28

201x.09.31

800 10 $8000

600 12 $7200

600 12 $7200150 10 $1500

650 10 $6500

800 10 $8000600 12 $7200

300 10 $3000 350 10 $3500

350 11 $3850350 10 $3500350 11 $3850

200 11 $2200 350 10 $3500150 11 $1650










Date In Out Balance

201x.09.01

201x.09.08

201x.09.15

201x.09.22

201x.09.28

201x.09.31

800 10 $8000

600 12 $7200

750 10.86 $8145 650 10.86 $7055

1400 10.86 $15200

300 10.86 $3258 350 10.86 $3797

350 11 $3850 700 10.92 $7647

200 10.92 $2184 500 10.92 $5463










(800*10+600*12+350*11)/(800+600+350)=10.89

10.89*(800+600+350-750-300-200)=5445



4. Cost of holding inventory 4.1 Reasons for holding inventories

To ensure sufficient goods are available to meet expected demand

To take advantage of bulk purchasing discountsTo absorb seasonal fluctuations and any variations in usage

and demandTo allow production processes to flow smoothly and efficientlyAs a deliberate investment policy, especially in times of

inflation or possible shortages

4.2 Holding cost4.2.1 Kinds of holding inventory (a) Costs of storage and stores operations. (b) Interest charges. (c) Insurance costs. (d) Risk of obsolescence. (e) Deterioration.



4.2.2 Definition

(1) Buffer inventory: a basic level of inventory held for emergencies and

to prevent stock-outing occurring, known as safety inventory.

(2) Fixed holding cost: including the cost of storage space and the cost

of insurance

(3) Variable holding cost: interest on capital tied up on the inventory

Holding cost are often stated as being valued at a certain percentage of

the average inventory held.

Stock-out costs are the costs associated with running out of inventory

And they include loss of salesman, loss of customers and reduce profits.

Stepped fixed cost



4.3 Ordering cost

On the other hand, if inventories are kept low, small quantities of

inventory will have to be ordered more frequently, thereby

increasing the following ordering or procurement costs.

(a) Clerical and administrative costs associated with purchasing,

accounting for and receiving goods

(b) Transport costs

It is essential to maintain inventory at a level (optimum level) to

keep the total of holding cost, ordering cost and stock-out cost at a

minimum level. the main objective of inventory control


Accounting for material

5. The economic order quantity (EOQ)

The economic order quantity (EOQ) is the order quantity which

minimizes inventory costs.



5.1



Example: A company uses 9000 units of a component per annum. The purchase price is $40 per unit and the cost of placing an order is $160. the annual holding cost of one component is 8% of its purchase price.

EOQ??

EOQ= (2 × 160 × 9000)/(8% × 40) = 949



5.2 Total annual cost of inventory

-The sum of the total purchasing cost, holding cost and ordering cost

Purchasing cost=purchase cost/unit *demand per annum

Holding cost=average inventory held*Ch

Ordering cost=(demand per annum/EOQ)*Co

Total annual cost=purchasing cost + holding cost + ordering cost

Average inventory held=re-order quantity/2=EOQ/2or

=re-order quantity/2+buffer inventory

若Ch为x% of price, price 有discount, Ch也要考虑discount



Example:

A company has an annual demand of 36750 units of one component

M. M costs $12 each. Fresh suppliers can be obtained immediately, but

ordering costs and the cost of carriage inwards are $200 per order. The

annual holding cost one M in stock is estimated to be $1.20. the total a

nnual cost with EOQ??

EOQ= (2 × 200 × 36750) ÷ 1.2=3500

Holding cost=EOQ/2*1.2=2100Ordering cost=(36750/EOQ)*200=2100Purchasing cost=12*36750=441000Total annual cost=2100+2100+441000=445200

No buffer

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