ACCA F2 - Management Accounting - Interactive Text

674 Pages·2016·8.73 MB·English

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Foundations in Accountancy FMA / ACCA Paper F2
Management Accounting
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Foundations in Accountancy FMA /
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ACCA Paper F2
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Foundations in
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Management Accounting E

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BPP Learning Media is an ACCA Approved Content Provider for the Foundations in
Accountancy qualification. This means we work closely with ACCA to ensure this T
Interactive Text contains the information you need to pass your exam.
In this Interactive Text, which has been reviewed by the ACCA examination team we:
 Highlight the most important elements in the syllabus and the key skills you
will need
 Signpost how each chapter links to the syllabus and the study guide
 Provide lots of exam focus points demonstrating what the examination will
want you to do
 Emphasise key points in regular fast forward summaries
 Test your knowledge of what you've studied in quick quizzes
 Examine your understanding in our practice question bank
 Reference all the important topics in our full index
BPP's Practice & Revision Kit also supports this paper.
FOR EXAMS FROM 1 SEPTEMBER 2016
TO 31 AUGUST 2017
F2/FMA MANAGEMENT ACCOUNTING

First edition March 2011
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CONTENTS
Contents
Page
Introduction
Helping you to pass.......................................................................................................................v
Chapter features...........................................................................................................................vi
Studying F2/FMA.........................................................................................................................vii
The Computer Based Examination...............................................................................................xviii
Tackling Multiple Choice Questions................................................................................................xix
Part A The nature, source and purpose of management information
1 Accounting for management...................................................................................................3
2 Sources of data...................................................................................................................19
3 Cost classification...............................................................................................................37
4 Cost behaviour...................................................................................................................55
5 Presenting information.........................................................................................................75
Part B Cost accounting techniques
6 Accounting for materials......................................................................................................99
7 Accounting for labour........................................................................................................133
8 Accounting for overheads...................................................................................................155
9 Absorption and marginal costing.........................................................................................185
10 Job, batch and service costing............................................................................................199
11 Process costing.................................................................................................................221
12 Process costing, joint products and by-products...................................................................251
13 Alternative costing principles..............................................................................................265
Part C Budgeting
14 Forecasting .....................................................................................................................285
15 Budgeting........................................................................................................................331
16 The budgetary process.......................................................................................................359
17 Making budgets work........................................................................................................393
18 Capital expenditure budgeting............................................................................................409
19 Methods of project appraisal..............................................................................................417
Part D Standard costing
20 Standard costing...............................................................................................................445
21 Cost variances..................................................................................................................455
22 Sales variances and operating statements............................................................................481
Part E Performance measurement
23 Performance measurement................................................................................................501
24 Applications of performance measurement...........................................................................545
Practice question bank.........................................................................................................................573
Practice answer bank...........................................................................................................................599
Appendix: Mathematical tables............................................................................................................625
Index.....................................................................................................................................................631
Review form

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F2/FMA MANAGEMENT ACCOUNTING

iv
INTRODUCTION
Helping you to pass
BPP Learning Media – Approved Content Provider
As ACCA's Approved Content Provider, BPP Learning Media gives you the opportunity to use study
materials reviewed by the ACCA examination team. By incorporating the examination team's comments
and suggestions regarding the depth and breadth of syllabus coverage, the BPP Learning Media
Interactive Text provides excellent, ACCA-approved support for your studies.
The PER alert!
To become a Certified Accounting Technician or qualify as an ACCA member, you not only have to pass
all your exams but also fulfil a practical experience requirement (PER). To help you to recognise areas
of the syllabus that you might be able to apply in the workplace to achieve different performance
objectives, we have introduced the 'PER alert' feature. You will find this feature throughout the
Interactive Text to remind you that what you are learning in order to pass your Foundations in
Accountancy and ACCA exams is equally useful to the fulfilment of the PER requirement.
Tackling studying
Studying can be a daunting prospect, particularly when you have lots of other commitments. The
different features of the Interactive Text, the purposes of which are explained fully on the Chapter
features page, will help you while studying and improve your chances of exam success.
Developing exam awareness
Our Interactive Texts are completely focused on helping you pass your exam.
Our advice on Studying F2/FMA outlines the content of the paper and the recommended approach to
studying and any brought forward knowledge you are expected to have.
Exam focus points are included within the chapters to highlight when and how specific topics might be
examined.
Using the Syllabus and Study Guide
You can find the Syllabus and Study Guide on pages ix – xvii of this Interactive Text.
Testing what you can do
Testing yourself helps you develop the skills you need to pass the exam and also confirms that you can
recall what you have learnt.
We include Questions – lots of them – both within chapters and in the Practice Question Bank, as well
as Quick Quizzes at the end of each chapter to test your knowledge of the chapter content.

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F2/FMA MANAGEMENT ACCOUNTING
Chapter features
Each chapter contains a number of helpful features to guide you through each topic.
Topic list Tells you what you will be studying in this chapter and the
relevant section numbers, together with the ACCA syllabus
references.
Introduction Puts the chapter content in the context of the syllabus as a
whole.
Study Guide Links the chapter content with ACCA guidance.
Fast Forward Summarises the content of main chapter headings,
allowing you to preview and review each section easily.

EXAMPLE Demonstrates how to apply key knowledge and techniques.
Key Term Definitions of important concepts that can often earn you
easy marks in exams.

Exam Focus Tells you how specific topics may be examined.
Point

Formula Formulae which have to be learnt.

PER Alert This feature gives you a useful indication of syllabus areas
that closely relate to performance objectives in your
Practical Experience Requirement (PER).
Question Gives you essential practice of techniques covered in the
chapter.

Chapter Roundup A full list of the Fast Forwards included in the chapter,
providing an easy source of review.
Quick Quiz A quick test of your knowledge of the main topics in the
chapter.
Practice Question Bank Found at the back of the Interactive Text with more exam-
style chapter questions. Cross referenced for easy
navigation.

vi
INTRODUCTION
Studying F2/FMA
How to use this Interactive Text
Aim of this Interactive Text
To provide the knowledge and practice to help you succeed in the examination for Paper F2/FMA
Management Accounting.

To pass the examination you need a thorough understanding in all areas covered by the syllabus and
teaching guide.
Recommended approach
(a) To pass you need to be able to answer questions on everything specified by the syllabus and
teaching guide. Read the Text very carefully and do not skip any of it.
(b) Learning is an active process. Do all the questions as you work through the Text so you can be
sure you really understand what you have read.
(c) After you have covered the material in the Interactive Text, work through the Practice Question
Bank, checking your answers carefully against the Practice Answer Bank.
(d) Before you take the exam, check that you still remember the material using the following quick
revision plan.
(i) Read through the chapter topic list at the beginning of each chapter. Are there any gaps
in your knowledge? If so, study the section again.
(ii) Read and learn the key terms.
(iii) Look at the exam focus points. These show the ways in which topics might be examined.
(iv) Read the chapter roundups, which are a summary of the fast forwards in each chapter.
(v) Do the quick quizzes again. If you know what you're doing, they shouldn't take long.
This approach is only a suggestion. You or your college may well adapt it to suit your needs.
Remember this is a practical course.
(a) Try to relate the material to your experience in the workplace or any other work experience you
may have had.
(b) Try to make as many links as you can to other papers at the Introductory and Intermediate levels.
For practice and revision use BPP Learning Media's Practice & Revision Kit, iPass and Passcards.

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F2/FMA MANAGEMENT ACCOUNTING
What F2/FMA is about
The aim of this syllabus is to develop a knowledge and understanding of the principles and techniques
used in recording, analysing and reporting costs and revenues for internal management purposes. It
covers management information, cost recording, costing techniques, budgeting and performance
measurement.
Approach to examining the syllabus
Paper F2/FMA is a two-hour paper. It can be taken as a written paper or a computer based examination.
The computer based examination contains 35 objective test questions – multiple choice, number entry
and multiple response and 3 longer style multi-task questions. (See page xvi for frequently asked
questions about computer based examinations.)
The written examination is structured as follows.
Number of marks
Section A
35 compulsory multiple choice questions of two marks each 70
Section B
3 compulsory multi-task questions of ten marks each, one from each of
syllabus areas C, D and E 30
100
The balance of questions in Section A reflects the weightings in Section B, so as to preserve the overall
balance of the paper.
The June 2015 examiner's report (found on the ACCA website) advised students to:
 Study the whole syllabus, because the paper will cover the full syllabus
 Practise as many questions as possible
 Read questions very carefully in the examination
 Try to attempt the 'easy' examination questions first
 Not to spend too much time on apparently 'difficult' questions
 Attempt all questions in the examination (there are no negative marks for incorrect answers)
 Read previous Examiner's Reports
 For paper exams, present Section B answers as tidily as possible
 Read Student Accountant
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