Managing Costs and Finance (MA2)

Managing Costs
and Finance
(MA2)
Syllabus and study guide

September 2023 to August 2024

Designed to help with planning study and to provide

detailed information on what could be assessed in any
examination session

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 Managing Costs and Finance (MA2)

Contents
1. Intellectual levels ..................................... 3
2. Learning hours and education recognition
...................................................................3
3. Qualification structure ............................. 3
4. Guide to ACCA examination structure and
delivery mode ............................................. 4
5. Guide to ACCA examination assessment 4
6. Relational diagram linking Managing
Costs and Finance (MA2) with other exams 5
7. Approach to examining the syllabus ........ 5
8. Overall aim of the syllabus ...................... 5
9. Introduction to the syllabus...................... 5
10. Main capabilities ................................... 6
11. The syllabus .......................................... 7
12. Detailed study guide.............................. 8
13. Summary of changes to Managing Costs
and Finance (MA2) ................................... 13

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 Managing Costs and Finance (MA2)

2. Learning hours and

1. Intellectual levels education recognition
ACCA qualifications are designed to As a member of the International Federation
progressively broaden and deepen the of Accountants, ACCA seeks to enhance the
knowledge and skills demonstrated by the education recognition of its qualification on
student at a range of levels on their way both national and international education
through each qualification. frameworks, and with educational authorities
and partners globally. In doing so, ACCA
Throughout, the study guides assess both aims to ensure that its qualifications are
knowledge and skills. Therefore, a clear recognised and valued by governments and
distinction is drawn, within each subject regulatory authorities and employers across
area, between assessing knowledge and all sectors. To this end, ACCA qualifications
skills and in assessing their application are currently recognised on the educational
within an accounting or business context. frameworks in several countries. Please
The assessment of knowledge is denoted by refer to your national education framework
a superscript K and the assessment of skills regulator for further information about
is denoted by the superscript S. recognition.

3. Qualification structure

The qualification structure requires candidates who wish to be awarded the ACCA Diploma
in Financial and Management Accounting (RQF Level 3) to pass both the FA2 and MA2
examinations and successfully complete the Foundations in Professionalism module.

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 Managing Costs and Finance (MA2)

4. Guide to ACCA 5. Guide to ACCA

examination structure examination assessment
and delivery mode ACCA reserves the right to examine
The Foundations examinations contain anything contained within any study guide
100% compulsory questions to encourage within any examination session. This
candidates to study across the breadth of includes knowledge, techniques, principles,
each syllabus. theories, and concepts as specified.

All Foundations examinations are assessed For specified financial accounting, audit and
by two-hour computer-based examinations. tax examinations, except where indicated
otherwise, ACCA will publish examinable
The pass mark for all FIA examinations is documents once a year to indicate exactly
50%. what regulations and legislation could
potentially be assessed within identified
examination sessions.

For this examination, regulation issued or

legislation passed on or before 31 August
annually, will be assessed from 1 September
of the following year to 31 August of the year
after. Please refer to the examinable
documents for the exam (where relevant) for
further information.

Regulation issued or legislation passed in

accordance with the above dates may be
examinable even if the effective date is in
the future. The terms ‘issued’ or ‘passed’
relate to when regulation or legislation has
been formally approved.

The term ‘effective’ relates to when

regulation or legislation must be applied to
entity transactions and business practices.

The study guide offers more detailed

guidance on the depth and level at which the
examinable documents will be examined.
The study guide should therefore be read in
conjunction with the examinable documents
list.

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 Managing Costs and Finance (MA2)

6. Relational diagram linking Managing Costs and Finance

(MA2) with other exams

The Foundations in Accountancy suite of qualifications is designed so that a student can progress
through three discrete levels; RQF Level 2, 3, and 4. However, entry is possible at any point. Students
are recommended to enter Foundations in Accountancy at the level which is most appropriate to
their needs and abilities and to take examinations in order, but this is not a requirement.

7. Approach to examining the syllabus

The syllabus is assessed by a two-hour computer-based examination. Questions will assess

all parts of the syllabus and will include both computational and non-computational elements.
The examination will consist of 50 two-mark questions.

8. Overall aim of the syllabus

To develop knowledge and understanding of how to prepare, process and present basic cost
information to support management in planning and decision-making in a variety of business
contexts.

9. Introduction to the syllabus

The syllabus for MA2, Managing costs and finance, introduces candidates to costing and
financing principles and techniques, and elements of management accounting which are
used to make and support decisions.
The syllabus starts by introducing candidates to management information clearly
distinguishing it from financial accounting information. The next section introduces the basics
of recording costs in management accounting. This is followed by coverage of a variety of
costing techniques used in business.
The next area of the syllabus introduces candidates to the use of management accounting in
support of decision making. Finally, the syllabus introduces the concept of cash
management as an essential element for planning.

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 Managing Costs and Finance (MA2)

10. Main capabilities

On successful completion of this examination, candidates should be able to:

A Explain the role of costing within the organisation and how costs are classified
B Describe and record costs by classification
C Explain and apply cost accounting techniques
D Use management accounting techniques to make and support decision-making.
E Explain the principles of cash management

Relational diagram of main capabilities:

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 Managing Costs and Finance (MA2)

11. The syllabus

A Management information

1. Management information requirements

2 Cost accounting systems

3 Cost classification

4. Information for comparison

5. Reporting management information

B Cost recording

1. Accounting for materials

2. Accounting for labour

3 Accounting for other expenses

C Costing techniques

1. Absorption costing

2. Marginal costing

3 Job and batch costing

4 Process costing

5 Service costing

D Decision making

1. Cost-volume-profit analysis

2. Factors affecting short term decision

making

3. Investment appraisal

E Cash management

1. Nature of cash and cash flow

2. Cash management

3. Cash budgets

4. Investing and financing

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 Managing Costs and Finance (MA2)

3. Cost classification
12. Detailed study guide
a) Describe the variety of cost
classifications used for different
A Management information purposes in a cost accounting system,
including by responsibility, function,
1. Management information direct/indirect and behaviour.[K]
requirements
b) Explain and illustrate the nature of
a) Describe the purpose of management variable, fixed, stepped fixed and mixed
information: planning, control and (semi-variable) costs.[S]
decision-making.[K]
c) Use the high low method to separate
b) Describe the features of useful semi-variable costs into their fixed and
management Information.[K] variable elements.[S]

c) Describe the nature, source and d) Use variable, fixed and semi-variable
importance of both financial and non- costs in cost analysis.[S]
financial information for managers.[K]
e) Analyse the effect of changing activity
d) Describe management responsibilities levels on unit costs.[S]
for cost, profit and investment and their
effect on management information and 4. Information for comparison
performance measurement.[K]
a) Explain the purpose of making
e) Explain the role of the trainee comparisons.[K]
accountant.[K]
b) Identify relevant bases for comparison:
2. Cost accounting systems previous period data, corresponding
period data, forecast/budget data.[S]
a) Describe the process of accounting for
input costs and relating them to work c) Explain the forecasting/budgeting
done.[K] process and the concept of feed forward
and feedback control.[K]
b) Describe the systems and processes for
different accounting transactions.[S] d) Explain and illustrate the concept of
flexible budgets.[S]
c) Explain and illustrate the use of codes in
categorising and processing e) Use appropriate income and
transactions (including sequential, expenditure data for comparison.[S]
hierarchical, block, faceted and
mnemonic coding methods).[K] f) Calculate variances between actual and
historical/forecast data which may or
d) Explain and illustrate the concept of cost may not be adjusted for volume change
units.[S] (note: standard costing is excluded).[S]

e) Describe the different methods of g) Identify whether variances are

costing final outputs and their favourable or adverse.[S]
appropriateness to different types of
business organisation.[S] h) Identify possible causes of variances.[S]

f) Identify the key features of a i) Explain the concept of exception

computerised accounting system.[K] reporting.[K]

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 Managing Costs and Finance (MA2)

j) Explain factors affecting the decision f) Describe the procedures required to

whether to investigate variances.[K] monitor inventory and to minimise
discrepancies and losses.[K]
5. Reporting management information.
g) Explain and illustrate the costs of
holding inventory and of being without
a) Describe methods of analysing, inventory.[S]
presenting and communicating
information.[K] h) Explain, illustrate and evaluate inventory
control levels (minimum, maximum, re-
b) Identify suitable formats for order) .[S]
communicating management
information according to purpose and i) Calculate EOQ and interpret optimal
organisational guidelines. [S] order quantities.[S]

c) Use data visualisation to present j) Explain the relationship between the

information using tables, charts and materials costing system and the
graphs (bar charts, line graphs, pie inventory control system.[K]
charts and scatter graphs). [S]
2. Accounting for labour

d) Identify the general principles of a) Explain, illustrate and evaluate labour

distributing reports (e.g. procedures, remuneration methods.[S]
timing, recipients) including the reporting
of confidential information.[K] b) Describe the operation of a payroll
accounting system.[K]
e) Interpret information (including tables,
charts and graphs) presented in c) Distinguish between direct and indirect
management reports.[S] labour costs.[K]

d) Describe the systems used to ensure

B Cost recording the correct coding, analysis and
recording of direct and indirect labour.[K]
1. Accounting for materials
e) Describe and illustrate the accounting
a) Describe the main types of material for labour costs.[S]
classification.[K]
f) Explain the relationship between the
b) Describe the systems used to ensure labour costing system and the payroll
the correct authorisation, coding, accounting system.[K]
analysis and recording of direct and
indirect material costs.[K] g) Explain the causes and costs of, and
calculate, labour turnover.[S]
c) Explain, illustrate and evaluate the
FIFO, LIFO and periodic and cumulative h) Describe and illustrate measures of
weighted average methods used to labour efficiency and utilisation
price materials issued from inventory.[S] (efficiency, capacity utilisation,
production volume and idle time
d) Describe and illustrate the accounting ratios).[S]
for material costs.[S]
3. Accounting for other expenses
e) Calculate material input requirements,
and control measures, where wastage a) Describe the nature of expenses by
occurs.[S] function.[K]

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 Managing Costs and Finance (MA2)

b) Describe the systems used to ensure over/under absorption.[S]

the correct authorisation, coding,
analysis and recording of direct and i) Describe and apply methods of
indirect expenses.[K] attributing non-production overheads to
cost units.[S]
c) Describe and calculate asset and
expenses items and illustrate the j) Calculate product costs using the
relevant accounting treatment.[K] absorption costing method.[S]

d) Calculate and explain depreciation 2. Marginal costing

charges using straight-line, reducing
balance, machine hour and product a) Explain and illustrate the concept of
units methods.[S] contribution.[S]

e) Explain the relationship between the b) Prepare profit statements using the
expenses costing system and the marginal costing method.[S]
expense accounting system.[K]
c) Prepare profit statements using the
absorption costing method.[S]
C Costing techniques
d) Compare and contrast the use of
1. Absorption costing absorption and marginal costing for
period profit reporting and inventory
a) Explain the rationale for absorption valuation.[K]
costing.[K]
e) Reconcile the profits reported by
b) Describe the nature of production and absorption and marginal costing.[S]
service cost centres and their
significance for production overhead f) Explain the usefulness of profit and
allocation, apportionment and contribution information respectively.[K]
absorption.[K]
3. Job and batch costing
c) Describe the process of allocating,
apportioning and absorbing production a) Identify situations where the use of job
overheads to establish product costs.[K] or batch costing is appropriate.[K]

d) Apportion overheads to cost centres b) Calculate unit costs using job and batch
using appropriate bases.[S] costing.[S]

e) Re-apportion service cost centre

overheads to production cost centres c) Describe the control of costs in job and
using direct and step-down methods.[S] batch costing.[K]

f) Justify, calculate and apply production d) Apply cost plus pricing in job costing.[S]
cost centre overhead absorption rates
using labour hour and machine hour 4. Process costing
methods.[S]
a) Identify situations where the use of
g) Explain the relative merits of actual and process costing is appropriate.[K]
pre-determined absorption rates.[K]
b) Distinguish between joint products
h) Describe and illustrate the accounting and by-products.[K]
for production overhead costs, including
the analysis and interpretation of c) Explain the accounting treatment of

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 Managing Costs and Finance (MA2)

joint products and by-products at the charts for a single product or

point of separation.[K] business.[S]

d) Apportion joint process costs using 2. Factors affecting short term decision
net realisable values and making
weight/volume of output
respectively.[S] a) Explain the importance of the limiting
factor concept.[K]
e) Evaluate the benefit of further
processing .[S] b) Identify the limiting factor in given
situations.[S]
5. Service costing
c) Formulate and determine the optimal
a) Describe the characteristics of service production solution when there is a
costing.[K] single resource constraint.[S]

b) Describe the practical problems relating d) Solve make/buy-in problems when there
to the costing of services.[K] is a single resource constraint.[S]

c) Identify situations (cost centres and e) Explain the concept of relevant costs.[K]
industries) where the use of service
costing is appropriate.[S] f) Apply the concept of relevant costs in
business decisions.[S]
d) Illustrate suitable cost units that may be
used for a variety of services.[S] 3. Investment appraisal

e) Calculate service unit costs in a variety a) Explain and illustrate the difference
of situations.[S] between simple and compound interest,
and between nominal and effective
interest rates.[S]
D Decision making
b) Explain and illustrate compounding and
1. Cost-volume-profit analysis discounting.[S]

a) Calculate contribution per unit and the c) Explain the distinction between cash
contribution/sales ratio.[S] flow and profit and the relevance of
cash flow to capital investment
b) Explain the concept of break-even and appraisal.[K]
margin of safety.[K]
d) Explain and illustrate the net present
c) Use contribution per unit and value (NPV) and internal rate of return
contribution/sales ratio to calculate (IRR) methods of discounted cash
break-even point and margin of safety.[S] flow.[S]

d) Analyse the effect on break-even point e) Calculate present value using annuity
and margin of safety of changes in and perpetuity formulae.[S]
selling price and costs.[S]
f) Calculate payback (discounted and non-
e) Use contribution per unit and discounted).[S]
contribution/sales ratio to calculate the
sales required to achieve a target g) Interpret the results of NPV, IRR and
profit.[S] payback calculations of investment
viability.[S]
f) Interpret break-even and profit/volume

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 Managing Costs and Finance (MA2)

E Cash management d) Explain and illustrate how a cash budget

can be used as a mechanism for
1. Nature of cash and cash flow monitoring and control.[S]

a) Define cash and cash flow.[K] 4. Investing and financing

b) Outline the various sources of cash a) Explain how surplus cash and cash
receipts and payments (including deficit may arise.[K]
regular/exceptional asset/expenses
receipts and payments, and drawings).[K] b) Explain the following types of short-term
investments and the associated
c) Describe the relationship between cash risks/returns:[K]
flow accounting and accruals (i) bank deposits
accounting.[K] (ii) money-market deposits
(iii) certificates of deposit
d) Distinguish between the cash flow (iv)government stock
pattern of different types of (v) local authority stock
organisations.[S]
c) Explain different ways of raising finance
e) Explain the importance of cash flow from a bank and the basic terms and
management and its impact on liquidity conditions associated with each type of
and company survival (note: calculation financing.[K]
of ratios is not required).[K]

2. Cash management

a) Outline the basic treasury functions.[K]

b) Describe the procedures for the receipt

and payment of cash, including
automated methods.[K]

c) Outline guidelines and legislation in

relation to the management of cash
balances in public sector
organisations.[K]

d) Describe how trends in the economic

and financial environment can affect
management of cash balances.[K]

3. Cash budgets

a) Explain the objectives of cash

budgeting.[K]

b) Explain and illustrate statistical

techniques used in cash forecasting
including moving averages and
allowance for inflation.[S]

c) Prepare a cash budget/forecast.[S]

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 Managing Costs and Finance (MA2)

13.Summary of changes to Managing Costs and Finance

(MA2)

ACCA periodically reviews it qualification syllabuses so that they fully meet the needs of
stakeholders such as employers, students, regulatory and advisory bodies and learning
providers.

The main areas of change to the MA2 syllabus are summarised in the table below.

Section and subject area Syllabus content

A1 Management information A1e removed and A1f has been
requirements renumbered as A1e
A2 Cost accounting systems A2a removed and all subsequent
learning outcomes have been
renumbered.

A2c (now A2b) reworded to

recognise the move away from
manual systems towards the
assumption of computerised
systems.

A2g (now A2f) reworded to focus

on the features of a computerised
system rather than the underlying
processes.
A5 Reporting management information A5a removed and all subsequent
learning outcomes have been
renumbered.

A5c (now A5b) reworded to remove

specific references and allow this
learning outcome to reflect all
formats, including technology-
based formats.

A5c new learning outcome

covering data visualisation.

A5e expanded to specifically

include tables, charts and graphs.

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 Managing Costs and Finance (MA2)

B1 Accounting for material B1b reworded to recognise the

move away from manual systems
towards the assumption of
computerised systems.

B1i EOQ has been added

B2 Accounting for labour B2d reworded to recognise the
move away from manual systems
towards the assumption of
computerised systems.

B3 Accounting for other expenses B3b reworded to recognise the

move away from manual systems
towards the assumption of
computerised systems.

C4 Process costing C4b, c, d, e and i removed and all

subsequent learning outcomes
have been renumbered.

D3 Principles of discounted cash flow This heading has been changed to

Investment appraisal.
E2 Cash management E2b reworded to recognise the
move away from manual cash
operations to automated methods.

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