INTRODUCTION


This qualification is suitable for candidates who are working, or are preparing to work, in an accounting environment at a level that requires a high level of cost accounting knowledge and skill, as well as a basic understanding of cost accounting principles and practice. Candidates attempting this qualification should have the knowledge and skills equivalent to the FIC level 1 Book-keeping qualification and Costing Accounting (Level 2) in order to understand the relationships between financial accounting and cost accounting, and professional accounting terms.


COST ACCOUNTING (LEVEL III)


AIMS


The aim of this qualification are to enable candidates to develop:

    • The ability to critically analyze information for both short term and long term decision making.
    • The ability to use management accounting information for the purposes of planning and control of cash and other resources within business organizations of factors affecting the planning and control process.
    • An understanding of business performance measures, and the relevance and impact of transfer pricing


TARGET AUDIENCE AND CANDIDATE PROGRESSION


The examination is intended for those who work, or aspire to work, in the more advanced areas of accountancy. The complex business world of today makes Cost Accounting a necessity for all types of managers. Organizations must attempt to acquire and utilize their resources in the best way possible, and managers need reliable accounting data to anticipate the future and control day-to-day activity. There is an increasing demand for employees who are capable of providing such important information.

Candidates attempting this examination must be totally familiar with the basic cost accounting principles, methods and terminology as contained in the FIC Cost Accounting (Level 2) syllabus and it is recommended that a pass is obtained at this level before proceeding to this Cost Accounting (Level 3) examination. Candidates who achieve Cost Accounting (Level 3) may progress to the FIC examination of Cost Accounting and Quantitative Techniques (Level 4)


LEVEL OF ENGLISH REQUIRED


Candidates should have a standard of English equivalent to intermediate or upper intermediate for Business.


STRUCTURE OF THE QUALIFICATION


The Certificate of Cost Accounting (Level 2) is a single unit qualification that consists of the range of topics detailed below:


SYLLABUS TOPICS


    1. Short term cost behavior
    2. Cost/volume/profit (CVP) analysis
    3. Short term decision making
    4. Budgetary Planning and Control
    5. Cash and working capital management
    6. Standard costing and variances
    7. Long term decision making
    8. Performance evaluation and transfer pricing


GUIDED LEARNING HOURS


FIC recommends that 140-160 Guided Learning Hours (GLHs) provide suitable course duration for an ‘average’ candidate at this level. This figure includes direct contact hours as well as other time when candidates ‘work is being supervised by teachers. Ultimately, however, it is the responsibility of training centers to determine the appropriate course duration based on their candidates ‘ability and level of existing knowledge. FIC experience indicates that the number of GLHs can vary significantly from one course to another.


ASSESSMENT


ASSESSMENT OBJECTIVES


The examination will assess the candidate’s ability to:

    • Analyze information in a variety of decision making situations and to explain the basis for the analysis and the validity of the techniques used.
    • Demonstrate knowledge and understanding of short-term planning and control principles, techniques and processes
    • Use, and interpret, business performance measures and transfer prices.


SKILLS ASSESSED


Candidates will need to show they can:

    • Add, subtract, divide and multiply, calculate and use percentages
    • Present information in statements in a form appropriate to management accounting
    • Present information in graphical format
    • Analyze and interpret data
    • Provide short written answers


EXAMINATION FORMAT


The time allowed for the examination is 3 hours, with the examination paper consisting of 5 questions. Candidates are required to answer all 5 questions, all questions carry equal marks. The emphasis of the paper will be quantitative; however, descriptive elements are incorporated into questions.


COVERAGE OF SYLLABUS TOPICS IN EXAMINATIONS


At least 1 question from each of the following syllabus topics will be set in each examination:

    • Short Term Decision Making (Syllabus Topic 2)
    • Short Term Profit Control (Syllabus Topic 3)
    • Long Term Decision Making and Control (Syllabus Topic 5)

Typical tasks that will be used to assess candidates:

(a) preparation of:

    • monthly cash budgets
    • statements that reconcile budgeted profit with actual results
    • profit and loss statements
    • working capital budgets
    • statements which show the order in which products should be manufactured

(b) calculation of:

    • net present values and internal rates of return
    • standard cost variances
    • break-even points and margins of safety
    • residual income figures

(c) support calculations and statements with:

    • interpretation of the figures shown
    • comments upon recommended action
    • identifying the advantages and/or disadvantages of particular techniques

This list is not exhaustive but is intended to show typical tasks that candidates must perform in the examination.


MARK ALLOCATION


A positive marking approach is used; although candidates will be penalized for initial calculation errors, they will gain marks for consequential ‘own figures’ as long as the correct use of principles has been demonstrated.


CERTIFICATION


Successful candidates will be awarded the certificate in Cost Accounting (Level 2) based on the achievement of the percentages and grades below:

    • Pass 50%
    • Merit 60%
    • Distinction 75%