Strategic Cost Management - Decision making (Paper-15) CMA Final Group 3

SECTION A: COST MANAGEMENT [20 MARKS]
1. Cost Management
(a) Developments in Cost Management:
(i) Life Cycle costing
(ii) Target costing
(iii) Kaizen Costing
(iv) Value Analysis and Value Engineering
(v) Throughput Costing
(vi) Business Process Re-engineering
(vii) Back-flush Accounting
(viii) Lean Accounting
(ix) Socio Economic Costing
(b) Cost Control and Cost Reduction – Basics, Process, Methods and Techniques of Cost Reduction programme.

SECTION B: STRATEGIC COST MANAGEMENT TOOLS TECHNIQUES [50 MARKS]
2. Decision Making Techniques
(a) Marginal Costing- Differential costing-CVP Analysis – Profit Volume Graphs – Contribution Approach
(b) Decisions involving alternative choices – Optimum utilization of resources – Make or Buy – Evaluation of Orders – Multiple scarce resource problems- Product sales pricing….etc
(c) Pricing Decisions and Strategies – New Product Pricing, Use of Costs in Pricing, Sensitivity Analysis in Pricing Decisions; Monopoly Pricing vs. Competitive Pricing; Bottom Line Pricing
(d) Costing of Service Sector – methods, pricing, performance measurement
(e) Transfer Pricing - Objectives, Methods (Cost Based, Market Price Based, Negotiated Pricing), Advantages and Disadvantages, Criteria for setting Transfer Prices, Transfer Price in different situations, Situations causing Conflicts and resolving the Conflicts;
(f) Relevant Cost Analysis : Relevant Cost, Irrelevant Costs - Sunk or Historical Cost, Committed Cost, Absorbed Cost, Situations where Fixed Costs become relevant for decision – making and its related implications
(g) Profitability Analysis – Product wise / Segment Wise/ Customer wise.

3. Standard Costing in Profit Planning
(a) Variance Analysis - Investigation of Variances, Planning and Operating Variances, Controllable/ Non-controllable Variances, Relevant Cost Approach to Variance Analysis; Variance analysis under marginal costing and absorption costing; Activity Ratios; Application of budgetary control and Standard Costing in Profit planning, Standard Costing Vs Budgetary Control, Reconciliation of Actual Profit with Standard Profit and /or Budgeted Profit.
(b) Uniform Costing and Inter-firm comparison.

4. Activity Based Cost Management – JIT and ERP
(a) Activity Based Cost Management - Concept , purpose, benefits, stages, relevance in decision-making and its application in Budgeting, Responsibility accounting, Traditional Vs. ABC System – comparative analysis
(b) JIT – introduction, Benefits, Use of JIT in measuring the Performance
(c) ERP and its applications in strategic cost management
(d) Bench Marking

5. Cost of Quality and Total Quality Management
(a) TQM - Basics, Stages, Principles, Control, Corrective actions
(b) PRAISE-Steps, Problems, implementation
(c) PARETO Analysis
(d) Quality Costs

SECTION C: STRATEGIC COST MANAGEMENT – APPLICATION OF STATISTICAL TECHNIQUES IN BUSINESS DECISIONS [30 MARKS]
6. Application of Operation Research and Statistical Tools in Strategic Decision Making
(a) Learning Curve,
(b) Linear Programming (Formulation only)
(c) Assignment,
(d) Transportation
(e) Simulation
(f) Network Analysis – CPM / PERT