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    CMA Final Syllabus 2016 (Paper 15): Strategic Cost Management - Decision Making


    Paper 15: Strategic Cost Management – Decision Making
    SECTION A: COST MANAGEMENT
    20%
    SECTION B: STRATEGIC COST MANAGEMENT TOOLS AND TECHNIQUES
    50%
    SECTION C: STRATEGIC COST MANAGEMENT – APPLICATION OF STATISTICAL TECHNIQUES IN BUSINESS DECISIONS.
    30%
    Section A: Cost Management
    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 and Techniques
    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
    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

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