Learning Objectives

1 describe the components of conventional and contemporary management accounting systems;

2 explain why management accountants focus particularly on costs;

3 explain what is meant by different costs for different purposes;

4 classify costs according to their behaviour—that is, as variable or fixed;

5 classify costs as direct or indirect;

6 classify costs as controllable or uncontrollable;

7 classify costs according to the segments of the value chain;

8 analyse costs using the classifications commonly used in manufacturing businesses;

9 explain the different definitions of product cost used in external accounting reports and for decision making; and

10 describe the cost flows in a manufacturing business and prepare a schedule of cost of goods manufactured, a schedule of cost of goods sold and an income statement for a manufacturer.