Course Code and Title: ACTA3 –Management Advisory Services

No. of Units: 3 units

Course Description:
The course focuses on the scope and objectives of Management accounting
in an organization, it tackles how accountant uses different method in computing
quantitative method that helps user interpret and analyze the financial statement
easily.
The course also includes topic in budgeting, capital budgeting, responsibility
accounting and transfer pricing, cost of capital, relevant costing and activity costing.
It also focuses on the differences of computing variable costing and absorption
costing and activity costing.
Learning Outcomes
At the end of the course, the students should be able to:
Knowledge
1. Be able to prepare a statement of cost of goods manufactured and sold and
explain the impact of risk and changing variables on cost volume profit analysis.
2. Be able to understand the nature of standard costing variance analysis.
3. Understand the distinction and characteristics of a variable costing and absorption
costing.
4. Be able to analyze financial statements and use different formula to compute
ratios that helps accountant interpret the financial status of the company.
Values
1. Be able to understand the benefit of accurate financial reporting and realize the
importance of the role of an accountant to any organization.
Skills
1. Learn techniques on how to effectively study accounting subjects, not only
management accounting.
2. Learn easier methods on computing certain amounts presented in the financial
statements and can make economic decision based on internal reports.

Number of Hours: 3 hours every week for 18 weeks or 54 hours in a semester

 Course learning outcomes Content Focusing on Essential Questions Face to Face

1 Introduction Discussion
Course orientation, Course Content
including house rules,
Schedule of topics to discuss
introduction of the
students and the professor Lesson Flow
Grading System
Class Rules and Regulations
Question and Answer
2 Chapter 1  Emergence and Growth of Management
Consultancy
 Reasons for hiring Management Consultants
 Services by CPAs
Historical Development
Evolution of MAS in the Philippines
 Nature and Scope of MAS
Areas of MAS
Characteristics of MAS
Broad Areas of MAS Discussion
Overview of The MS MAS Qualifications Based on Required Evaluation - Graded
practice by the CPA Expertise Recitation
Advantages of CPAs Over Other Evaluation - Gform
Professionals in Rendering MAS
Determination of scope of service
 Role of Consultants and Clients in MAS
Engagements
 MAS Practice Standards
 MAS Engagements: Development and
Execution
Stages in MAS Engagements
Preparing for and Starting the Engagement
Conducting the Engagement
Preparing and Presenting the Report
Implementation or Installation of
Recommendations Evaluating the Engagement
Post -Engagement Follow- up

Chapter 2  Computation of Profit

Profit Planning
 Cost-Volume-Profit Analysis
Cost Concept and Classifications
Cost Behavior
Fixed Cost
Variable Costs
Mixed Costs
Semivariable Costs
Semifixed Costs
  Cost Behavior Assumptions
The Relevant Range Assumptions
The time Assumptions
 Segregation of Fixed and Variable Elements
of Mixed Costs Discussion
High-Low Method Evaluation - Graded
Cost Behavior & Cost Other Techniques Recitation
Volume profit analysis  The Variable Costing Income Statement Evaluation - Gform
Break-Even Analysis
Equation Method or Algebraic Approach
Contribution Margin or Formula Approach
Profit Planning and Break-Even
 Sales Formulas
Desired Profit after Tax
Desired Profit Expressed as a Certain
Percentage
 The Margin of Safety
 Multiple Products Break-Even Analysis
 Other Cost Volume Profit Analysis
Factors Affecting Profit
Changes in Underlying Factors
 Assumptions and Limitations Underlying Cost-
Volume-
Profit Analysis
 Uses of Cost-Volume-Profit Analysis
3 Chapter 3  The Nature of Standard Costs
Standard Costs Defined
Purposes of Standard Costs
 The Standard Cost System
Development of Standards
Setting of Standard
Types of Standards
Who Sets the Standards? Discussion
Accumulation of Actual Costs Evaluation - Graded
Computation and Analysis of Variances Recitation
Standard Costing Variance  Direct Material Variances Evaluation - Gform
Analysis Accumulation of Actual Data
Computation of Standard Costs
Analysis of Total Variance
The Price Variance
The Quantity Variance
Graphical Illustration
Determination of Possible Causes of
Variances
Materials Purchase Price Variance
 Direct Labor Variances
Accumulation of Actual Data
Computation of Standard Labor Cost
Computation and Analysis of Variances
Labor Rate Variance
Labor Time Variance
 Graphical Illustration
Determination Of Possible Causes of
Variances
 Factory Overhead Variances
The fixed Budget Approach
The Flexible Budget Approach
Different Types of Capacity Levels
Two-Variance Method
Three-Variance Method
Four-Variance Method
Relationships Among Variances
 Determination of Standard Cost Based on
Equivalent Production
 Materials Price, Mix and Yield Variances
 Standard Cost Accounting Procedures
Journal Entries
Disposition of Variances
Revising Standard
4 Chapter 4  Conventional Income Statement
 Variable Costing Income Statement
 Absorption and Direct Costing Discussion
Variable Costing  Absorption and Variable Costing and Standard Evaluation - Graded
Absorption Costing Cost Recitation
 Arguments for and Against the Use of Variable Evaluation - Gform
Costing
 Arguments for the Use of Variable Costing
 Arguments Against the Use of Variable Costing
5 Chapter 5  The Concept of Decentralization
Benefits of Decentralization
Costs of Decentralization
 Responsibility Centers
Responsibility Discussion
Accounting - Costs Centers Evaluation - Graded
Evaluation of Costs Centers’ Performance Recitation
Use of Budgets in Cost Evaluation Evaluation - Gform
Responsibility Accounting Reports
Classification of Cost in Responsibility
Accounting

- Profit Centers
Evaluation of Profit Centers’ Performance

- Investment Centers
Evaluation of Investment Centre’s
Performance
Residual Income

6 Chapter 5  Transfer Pricing Methods Discussion

Market Price Evaluation - Graded
Modified Market Price Recitation
 Transfer Price Based on Full Cost Evaluation - Gform
Transfer Pricing Transfer Price Based on Variable Cost
Negotiated Transfer Price
Dual Transfer Pricing
Standard Costs in Transfer Pricing
 Accounting Treatment for Intra Company
Transfers

7 Chapter 6  Budget Defined

A Budget is Quantitative
A Budget Refers to a certain Entity
A Budget is for a specific Future Period of
Time
Profit Planning and Budgeting
 Profit Planning and Budgeting
Long Range and Short-Range Profit Planning
Setting Profit Objectives
Uses/Advantages of Budgeting
Functions of Budgeting
Limitations of Budgeting
Budgets and Standards Discussion
Comprehensive Budgeting Organization for Budgeting Evaluation - Graded
Budgeting Principles Recitation
The Master Budget Evaluation - Gform
Sales Budget
Inventory Levels Budget
Production Budget
Materials Budget
Direct Labor Budget
Factory Overhead Budget
 Financial Budget
Capital Expenditures Budget
Cash Budget
Budgeted Balance Sheet
Budgeted Statement of Changes in Financial
Position
 Master Budget Illustrated
Graphic Illustration
Illustrative Problem
 Budget Review Process
Size and Scope
Contents of the Budget Manual
 Control Through Budgeting
Budget Performance Reports
 Budget Revision
 Progressive or Continuous Budgeting
 Zero -Base Budgeting

Chapter 7  The Decision Making Process Discussion

Relevant Costing for  Identifying Relevant Costs Evaluation - Graded
 decision making  Approaches in Analyzing Alternatives in Recitation
Nonroutine Decision Making Evaluation - Gform
 Types of Decisions
Make or Buy Decision
Adding or dropping
Products/Segments
Sell now or Process Further
Special Sales Pricing
Utilization of Scarce Resources
Shutdown or Continue Operations
Pricing Products and Services
8 ALLOWANCE
9 MIDTERM EXAM
10 Chapter 8  Capital Budgeting Defined
 Characteristics of Capital Investment Decisions
 The Capital Budgeting Process
Identification of Potential Projects
Estimation of Costs and Benefits
Evaluation of Proposed Projects
Development of the Capital Expenditure
Budget
Reevaluation of Projects
 Types of Capital Investment Project
Replacement
 Evaluating Capital Investment Projects
Capital Budgeting Capital Investment Factors Discussion
Net Investment Evaluation - Graded
Cost of Capital Recitation
Economic Life Evaluation - Gform
Terminal Values
 Commonly Used Methods of Evaluation
Payback Method
Bail-out Method
Discounted Cash Flow Methods
Net Present Value Method
Profitability Index
Net Present Value Index
Present Value Payback Method
Time- Adjusted Rate of Return Method
Payback Reciprocal
 Other Factors Influencing Capital Investment
Decisions
Economic Conditions
Growth Policies
Risk Evaluation
Availability of Funds

 Advantages and Limitations of ABC

11 Chapter 9 Discussion
 Activity Based Costing  Design of an ABC System Evaluation - Graded
 Manufacturing Applications of ABC Recitation
 ABC application to a Merchandising Company Evaluation - Gform
 ABC application to a Trading Company
 Activity Based Management
 Opportunity Costing Concepts

12 Chapter 10  Analytical Tools and Techniques

Horizontal Analysis
Formula for Percentage Change
Absolute and Percentage Changes
Development of Treads
Graphic Presentation
Vertical Analysis
Conversation Procedures
Comparison with Other Firm’s
Statements
Ratio Analysis
Tests of Liquidity
Current Ratio
Acid- Test Ratio Discussion
Working Capital Activity Ratios Evaluation - Graded
Analysis of Financial Receivable Turnover Recitation
Statements Inventory Turnover Evaluation - Gform
Merchandising Firm
Manufacturing Firm
Operating Cycle
Trade Payables Turnover
Tests of Solvency
Times Interest Earned
Debt/Equity Ratio
Debt Ratio
Equity Ratio
Tests of Profitability
Return on Sales
Return on Total Assets (ROA)
Return On Owner’s Equity
Earnings Per Share (EPS)
Market Tests
Price/Earnings Ratio (P/E)
Dividend Yield
Dividend Payout
 Interpretation and Use of Financial Ratios
 Gross Profit Variance Analysis
Procedures for Analyzing Gross Profit
Variations
4- Ways Analysis
6- Ways Analysis
3- Ways Analysis
 Illustrative Example
 Gross Profit Variance Analysis for Two or More
Products
13 Chapter 11  Working capital policy Discussion
Working Capital  Cash Management Systems Evaluation - Graded
Management Recitation
Receivables Management
Evaluation - Gform
Inventory Management
Marketable Securities Management
 Trade credit
Short term loan
Short term financing alternatives

14 Chapter 12  Cost of capital basic concepts Discussion
Cost of Capital  Cost of debts Evaluation - Graded
Recitation
 Cost of preferred stock
Evaluation - Gform
 Cost of common equity – Dividend Growth
model
 Cost of common equity – Cpital asset
Pricing Model
 Retained Earnings Breakpoint
 Marginal Cost of Capital
 Weighted average cost of capital
 Risk and return
 Marketable Securities management
15 Chapter 13  Rationale in using Quantitative Techniques
 Probability
 Decision making under Certainty and
Uncertainty
 Decision tree
Underlying concept
Advantages & Limitations
Steps in making a Decision tree
 Learning curve Discussion
 Simulation techniques Evaluation - Graded
Quantitative Methods  Monte Carlo Technique Recitation
Evaluation - Gform
 Sensitivity Analysis
 Queuing
 Linear programming
Nature and applications
Steps in the formulation of a linear
Program
 Program Evaluation and Review
Techniques (PERT)
Basic underlying concepts
Expected activity time
 Concept of critical path
Cost of estimating
 Gantt Chart
Steps in Preparing a Gantt Chart
Illustration of Gantt Chart
Advantages of Gantt Chart
 Inventory Modeling
Inventory cost
EOQ model
Reorder Point
Safety Stock
16
17
18 ALLOWANCE - FINAL REVIEW
19 ALLOWANCE - OVERALL REVIE
20 FINAL EXAM

GRADING SYSTEM

Class Standing
Quizzes/
Lecture Project/ Major Exam
Exercises Recitation
Assignment
Midterm Grade 30% 15% 15% 40%

Final Term Grade 30% 15% 15% 40%

Course Grade (Midterm Grade 40% + Final Term Grade 60%)

By: Prof EVELYN B. FERRARIS

CPA, MBM