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Management accounting AC2097

This course is designed to provide students with knowledge and skills enabling them to design appropriate management accounting reports.

This course provides information for operational and strategic decision making, planning, control and performance measurement largely in a business context.

Prerequisite / Exemptions

If taken as part of a BSc degree, the following course must be passed before this course may be attempted:

  • AC1025 Principles of accounting

Topics covered

  • Management accounting and its strategic context
  • Introduction and application of full absorption costing
  • Process costing and capacity management
  • Activity Based Costing (ABC)
  • Activity Based Management (ABM)
  • Cost volume profit analysis
  • Application of cost volume profit analysis
  • Relevant information for decision making
  • Decision making with constraint and uncertainty
  • Theory and practice of pricing
  • Long-term decision making, capital budgeting and lifecycle costing
  • Strategic Budgeting
  • Budgeting and control
  • Variance analysis further issues
  • Divisional performance management systems
  • Transfer pricing and its effect on performance management systems
  • Cost management, JIT and environmental accounting
  • Strategic performance measurement – the use of non-financial performance measures
  • Closing the loop: strategic management accounting
  • Summary and suggestions for answering examination questions.

Learning outcomes

If you complete the course successfully, you should be able to:

  • discuss the changing role of management accounting
  • critically evaluate the uses of Management Accounting information for strategic decision making in various business contexts
  • select, devise and apply different types of cost and revenue analysis and explain their different roles for supporting operational and strategic managerial decisions
  • design and prepare budgets and explain their use in planning and control
  • design and use variances to support feedback, analysis and control
  • identify and discuss different methods of investment appraisal
  • discuss various approaches to performance measurement and control in various types of organisations, and devise and evaluate indicators of performance.


Unseen written exam (3 hrs 15, including reading time).

Essential reading

  • Drury, C. Management and Cost Accounting. Cengage Learning, 2016. 9th Edition.

Course information sheets

Download the course information sheets from the LSE website.