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CA Final Quick Revision Notes On Advanced Management

CA Final Quick Revision Notes On Advanced Management

CA Final Quick Revision Notes On Advanced Management – Advanced management accounting concepts and techniques are organised around a focus on strategy to enable you contribute to an organisations’ successful navigation of mid-to long-term challenges. The module builds on Management accounting to extend your understanding of approaches such as: value chain analysis,strategic pricing,lean manufacturing,strategic issues for financing the firm,risk analysis, project appraisal techniques,performance appraisal and the balanced scorecard. You will be encouraged to take a critical approach to evaluating techniques and theories and equipped to apply them in case study settings.

In this article we are providing  CA Final Quick Revision Notes on Advanced Management Accounting. It is helpful for your last day quick revision.


Scroll down and download CA Final Quick Revision Notes On Advanced Management By CA Rakesh Agrawal

CA Final AMA important Topics

Topic wise in order of preference :-

1. Transportation Problem
2. Linear Programming
4. Simulation
5. Learning Curve
6. Developments in the Business Environment
7. Budget & Budgetary Control
8. Pricing Decision & Transfer pricing
9. Cost Concepts in Decision making
10. CVP Analysis and Decision making
11. Standard Costing

CA Final AMA Study guide


While starting, you can go to practical topic like Transportation Problem, Developments in the Business Environment, Pricing Decision & Transfer pricing etc. But never ignore or try to underweight theory part, these cover 20-25 percentage of exam paper in paper 5 “AMA”.

Theory portion plays a vital role in this paper. If nothing will work, then surely theory will work in this paper. Weightage of theory portion usually remains 20-30 marks, but generally we found 16 marks of theory in every term paper. So, make your plan accordingly.

I personally recommend you to read theory portion at least one hours on daily basis then only you can able to memories and able to write in exam hall.

ABC Analysis according to trend of marks allocations

ATransportation Problem, Liner Programming, Network Analysis, Simulation, Learning Curve, Developments in the Business Environment50-60 Marks
BBudget & Budgetary Control, Pricing Decision & Transfer pricing, Theory portion30-40 marks
CCost Concepts in Decision making, CVP Analysis and Decision making and Standard Costing etc30-35 marks

Effective Method Of Studies

Please understand the concept. The institute will not ask any irrelevant questions. All the questions are based on the concept. This correction you need to be made during the time of study. The clarity in the concept will help you for dealing such type of questions.

Following steps to be followed :-

Step No. 1a) Need to have an Open mind and Understand the concept

b) First of all cover the topics mentioned in Category A & B thereafter focus on Category C. After covering the Category A & B , you would gain confidence on the subject. If you feel that you have a little space in time then accomplish the topics Category C. Category A & B is equally important.

Step No. 2 Sources of Preparation/Books to be referred
a) Select a right/good book and Read itRecommends books :- Any good coaching notes like Sanjay Aggrawal Sir and Padhuka’s book.b) Must read Practice manual.

c) Read revision test papers, suggested answers for Past years, this will give you variety type of questions with answer writing pattern.

Outline of the CA FINAL AMA Syllabus

The entire ‘Syllabus’ of the ‘Advanced Management Accounting’ has been divided into sixteen chapters. The topics covered under these chapters are:

1. Cost Management

2. Cost Volume Profit Analysis

3. Pricing Decisions

4. Budgets and Budgetary Control

5. Standard Costing and Variance Analysis

6. Transfer Pricing

7. Cost Management in Service Sector

8. Uniform Costing and Inter Firm Comparison

9. Profitability Analysis-Product wise/Segment wise/Customer wise

10. Financial Decision Modeling

11. Linear Programming

12. Network Analysis-PERT/CPM, Resource Allocation and Resource Leveling

13. Transportation Problems

14. Assignment Problems

15. Simulation

16. Learning Curve Theory.

Chapter Specific Guidelines for CA FINAL COSTING

Chapters 1 to 9 emphasize the role of ‘Management Accounting’ in decision making, particularly in providing information  and  analysis  to  support  strategic  management  activity.  The  focus  is  on  evaluating  existing competitive strategies, developing new strategies, and monitoring and assessing progress towards chosen strategies.

Chapter-1, Developments in the Business Environment

This chapter introduces students to the area of modern concepts in ‘Cost Management’.  It discusses recent developments in business environment and advanced management accounting techniques such as Total Quality Management (TQM), Activity Based Costing (ABC), Target Costing, Life Cycle Costing, Value Chain Analysis, Cost Control and Cost Reduction, Computer-Aided Manufacturing, Just in Time (JIT), Manufacturing Resources Planning, Synchronous Manufacturing, Business Process Re-engineering and Theory of Constraints. While going through these topics students need to link their study with other chapters or previous studies at Intermediate (IPC) Course level. Some topic wise useful techniques are given as under:

Total Quality Management: This topic is based on continuous effort of management in maintaining quality of a product; believe in the product and improvement in the product. In this topic students need to get conversant with various techniques of ‘Quality Management’. The concept of ‘Six Sigma’ also shall be thoroughly understood by the students.

This topic is based on continuous effort of management in maintaining quality of a product; believe in the product and improvement in the product. In this topic students need to get conversant with various techniques of ‘Quality Management’. The concept of ‘Six Sigma’ also shall be thoroughly understood by the students.

Activity Based Costing: As said earlier students need to inter-connect their study with other chapters or topics. ABC is connected with ‘Absorption Costing’ studied at Intermediate (IPC) Course level under the chapter ‘Overheads’. ABC is also used as a tool for ‘Decision Making’, so their learning in this topic may be tested in succeeding chapters of ‘Decision Making’ and ‘Costing for Service Sectors’. Students should be able to use of ‘Direct’ and ‘Activity-Based Cost’ methods in tracing costs to ‘Cost Objects’, such as customers or distribution channels, and the comparison of such costs with appropriate revenues to establish ‘tiered’ contribution levels, as in the activity-based cost hierarchy.

Target Costing: Every organization is driven by a corporate strategy which fulfills the mission and goals of an organization. In doing so organizations complying with its long term goal, it fixes its desired profit without losing its market share. In this topic students shall understand how an organization maintains its selling price with variable cost targets. This topic also requires application of decision making techniques used in the succeeding topics.

Life Cycle Costing, Value Chain Analysis, Cost control and Cost Reduction, Business process re-engineering, Theory of Constraints: In these topics students are required to identify the factors which have significant implications on product manufacturing and in product’s cost.

Just in Time (JIT), Computer-aided manufacturing, Manufacturing Resource Planning and Synchronous Manufacturing: These topics are related with ‘Inventory Control’ and ‘Production Management Techniques’ to reduce or control costs.

This chapter is very important from the students prospective. Generally, students pay less attention to theory based chapters and the theoretical concepts of underlying different topics. But it is very important that students have thoroughly studied the theoretical aspects of the subject so that theoretical aspects help them in understanding the concepts and logic behind the mathematical workings and formulae while solving problems related to that particular concept.

Chapter-2, Decision Making Using Cost Concepts and CVP Analysis   

Chapter-3, Pricing Decisions

In these two chapters Students have to study Different Cost Concepts, Application of Cost Concepts in Decision Making, Cost-Volume-Profit (CVP) Analysis and Pricing Decision. ‘Management Accounting’ is fundamental in strategic planning. ‘Managerial Accounting’ information provides data-driven input to the decisions, which can improve decision-making over the long term. For example- Should a company shut down a division, Should it make or buy a product, Should it export or not, Should it accept an offer? Students should understand the concepts,  need  and  impor tance  of  ‘Marginal  Costing’  in  decision  making.  Students  should  also  have under standing  of  area  of  ‘Financial  Decision  Modeling’  and  application  of  the  same  in  predicting product/service costs. Clarity of concepts and self expression is essential for success.

Chapter-4, Budget & Budgetary Control

This chapter basically tries to impart students the concept of ‘Budgeting’. ‘Budgeting’ and ‘Financial Statement Projections’ are just a few examples of how managerial accounting information is used to provide information to help management guide the future of a company. By focusing on this data, one can make decisions that aim for continuous improvement and are justifiable based on intelligent analysis of the company data. Students are required to learn the difference between various types of budgets and process of preparation of budgets.

Chapter-5, Standard Costing

This chapter examines the functional-based standard costing systems in managing costs, improving planning and control, and facilitating decision making and product costing. This chapter has very important concepts of standard costing like computation of variances, control through variance analysis, accounting and reporting of variances. Classification of variances and interrelationship could be understood from the chart given in the ‘Study Material’. Students should be versed with variance analysis under marginal costing and absorption costing with concept of reconciliation of actual data and be familiar with the application of learning curve in standard costing. This chapter requires lots of practice. ‘Study Material’ is very helpful for clear understanding of the concept. Students should do thorough practice to avoid computational errors.

Chapter-6, Costing of Service Sector

This chapter introduces students to various costing systems in the service sectors, the different types of cost behavior and their uses for decision making and planning via CVP analysis. It is important for the students to know the concept of relevant costing in relation to pricing decisions, joint cost and service department cost allocations.

Chapter-7, Transfer Pricing

This chapter covers concepts of ‘Transfer Pricing’. ‘Transfer Pricing’ are used to evaluate the goods and services exchanged between profit centers of a decentralized firm. Students should be able to analyze the situation when a division operating at capacity. Students should also be versed with concept of ‘Multinational Transfer Pricing’. Thorough practice of the problems is required for better understanding of transfer pricing concept.

Chapter-8, Uniform Costing

This chapter basically tries to impart about ‘Uniform Costing’. It is a system of cost accounting to be used by the members of the industry. It involves adoption of same costing principles, practices and procedures by the individual members of the industry for inter-firm comparison. This is very important theoretical chapter.

Chapter-9, Cost Sheet, Profitability Analysis and Reporting

This chapter introduces students to the concept of ‘Balance Score Card’. ‘Balanced Scorecard’ is a managerial accounting measure. It can be used in any situation in which managerial accounting measures are appropriate, such as internally evaluating firm performance. Students should refer ‘Study Material’ and ‘Practice Manual’ for conceptual clarity of ‘Balance Score Card’.

Financial Decision Modeling (Chapter 10-16) has become an essential tool in business applications. Modeling and analysis play major roles in abstract representation of business systems and data analysis and the subsequent generation of relevant information for making more accurate decisions. It consists of mathematical techniques that are increasingly used in decision making process such as Linear Programming, Transportation, Simulation, Networking Analysis, Assignment and Learning Curve. ‘Syllabus’ covers applications of quantitative techniques for solving problems in manufacturing and service organizations. Key problem areas include marketing, production, logistics, procurement, and finance etc.

Chapter-10, Linear Programming

‘Linear Programming’ is a mathematical tool for determining the optimum allocation of resources and obtaining a particular objective. Students should be able to solve complex situations involving multiple constraints by various methods.

Chapter-11, Transportation Problem

This chapter deals with a special class of ‘Linear Programming’ problem in which the objective is to ‘transport’ a single commodity from several ‘sources’ to different ‘destinations’ at a minimum total cost. Students should be versed with treatment of unbalanced problem. Students should also learn different methods for finding initial basic feasible solution.

Chapter-12, Assignment Problem

This chapter deals with assigning sources so that the total cost for performing all jobs is minimum. Students should be able to crack scenario of multiple solutions, unbalanced problem and prohibited assignments.

Chapter-13, Critical Path Analysis;  

Chapter-14, Program Evaluation and Review Technique

Both ‘Critical Path Analysis’ and ‘Program Evaluation and Review Technique’ are ‘Management Accounting’ techniques for planning and control of large complex projects. Both are techniques to network analysis wherein a network is prepared to analyze interrelationships between different activities of a project. Students should be familiar with concept of Resource Leveling, Smoothing and Crashing related to the networking analysis.

Chapter-15, Simulation

It  is  important  for  the  students  to  understand  the  application  of  ‘Simulation’  techniques  in  managerial accounting practice for financial forecasting, analyzing capital investment, inventory analysis, production planning, and strategic enterprise management.

Chapter-16, Learning Curve Theory

The principle underlying learning curves is generally well understood -‘if we perform tasks of a repetitive nature, the time we take to complete subsequent tasks reduces until it can reduce no more’. This is relevant to ‘Management Accounting’ in the two key areas of ‘Cost Estimation’ and ‘Standard Costing’. Students should try to link this chapter with the concept of the ‘Management Accounting’ and try to understand application of the same in predicting product/service costs.


Download CA Final Quick Revision Notes On Advanced Management quick revision notes by CA Rakesh Agrawal

  Download CA Final Quick Revision Notes On Advanced Management

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Download CA Final AMA Notes and amendments for may 2017 Exam

CA Final AMA notes for may 2017 Exam here

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