Core management accounting concepts in costing, budgeting, performance management and decision-making. Also covers the role of management accounting in the public sector.
This paper introduces the internal accounting information that managers use to plan, control, and make decisions. Unlike financial accounting (which serves external users), management accounting is forward-looking and operational. Candidates learn how to cost products and services, prepare and interpret budgets, analyse variances, and use accounting data to support key business decisions. This paper directly feeds into the more advanced Management Accounting paper at Level 2.
Fixed, variable, semi-variable, direct, indirect costs — and how cost behaviour affects business decisions.
Full costing vs. contribution-based approaches; the impact on profit reporting and inventory valuation.
Cost drivers, activity cost pools, and when ABC provides more accurate product/service costs.
Preparing master budgets, functional budgets, cash flow forecasts, and flexible budgets.
Material, labour, and overhead variances — calculating and interpreting to identify performance issues.
Contribution analysis, break-even analysis, margin of safety, make-or-buy, and limiting factor decisions.
VFM (value for money), performance indicators, and budgeting frameworks in government and NGOs.
Calculations must be clearly laid out with working shown step-by-step. Marks are often awarded for correct method even if the final figure is wrong — never skip your workings.
Management Accountant
Cost Accountant
Budget Analyst
Finance Controller
Operations Finance Manager
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