FINAL COURSE STUDY MATERIAL PAPER 5 ADVANCED MANAGEMENT ACCOUNTING MODULE 3 BOARD OF STUDIES THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA
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CONTENTS MODULE 1 Chapter-1 : Developments in the Business Environment Chapter-2 : Decision Making Using Cost Concepts and CVP Analysis Chapter-3 : Pricing Decisions MODULE 2 Chapter 4 Budget & Budgetary Control Chapter 5 Standard Costing Chapter 6 Costing of Service Sector Chapter 7 Transfer Pricing Chapter 8 Uniform Costing and Inter Firm Comparison Chapter 9 Profitability Analysis - Product Wise / Segment Wise / Customer Wise MODULE 3 Chapter 10 Linear Programming Chapter 11 The Transportation Problem Chapter 12 The Assignment Problem Chapter 13 Critical Path Analysis Chapter 14 Program Evaluation and Review Technique Chapter 15 Simulation Chapter 16 Learning Curve Theory APPENDIX iii
DETAILED CONTENTS: MODULE 3 CHAPTER 10 LINEAR PROGRAMMING 10.1 Introduction... 10.1 10.2 Graphical Method... 10.3 10.3 Trial & Error method of solving Linear Programming Problem... 10.11 10.4 The Simplex method for maximization problems... 10.14 10.5 Simplex method for minimization problems... 10.21 10.6 Marginal value of a resource... 10.26 10.7 Some remarks... 10.27 10.8 Practical applications of linear programming... 10.28 10.9 Miscellaneous Illustrations... 10.30 10.10 Limitations of linear programming... 10.64 CHAPTER 11 THE TRANSPORTATION PROBLEM 11.1 Introduction... 11.1 11.2 Methods of finding initial solution to transportation problems... 11.3 11.3 Optimality test... 11.10 11.4 Special cases... 11.16 11.5 Maximization transportation problems... 11.20 11.6 Prohibited routes... 11.23 11.7 Miscellaneous illustrations... 11.27 Summary... 11.44 CHAPTER 12 THE ASSIGNMENT PROBLEM 12.1 Introduction... 12.1 12.2 The Assignment algorithm... 12.1 12.3 Unbalanced assignment problems... 12.7 iv
CHAPTER 13 CRITICAL PATH ANALYSIS 13.1 Introduction... 13.1 13.2 General framework of PERT/CPM... 13.2 13.3 Advantages of critical path analysis... 13.2 13.4 Fundamentals of a CPA network... 13.3 13.5 Critical path analysis... 13.20 13.6 Distinction Between PERT & CPM... 13.29 Summary... 13.30 CHAPTER 14 PROGRAM EVALUATION AND REVIEW TECHNIQUE 14.1 Introduction... 14.1 14.2 Updating the network... 14.9 14.3 Project crashing... 14.11 14.4 Resource smoothing... 14.21 14.5 Resource levelling... 14.26 14.6 Miscellaneous Illustrations... 14.26 14.7 A few comments on assumptions of PERT & CPM... 14.42 14.8 Distinction between PERT & CPM... 14.43 CHAPTER 15 SIMULATION 15.1 Introduction... 15.1 15.2 What is simulation?... 15.1 15.3 Monte Carlo simulation... 15.3 15.4 Simulation and inventory control... 15.12 15.5 Miscellaneous illustrations... 15.14 15.6 Random numbers table... 15.23 v
CHAPTER 16 LEARNING CURVE THEORY 16.1 Introduction... 16.1 16.2 Distinctive features of learning curve theory in manufacturing environment... 16.2 16.3 The learning curve ratio... 16.2 16.4 Learning curve equation... 16.4 16.5 Learning curve application... 16.4 16.6 Application of Learning Curve... 16.7 16.7 Financial Costs effected by Learning Curve... 16.7 16.8 Important Consequences of learning curve in Management Accounting... 16.7 16.9 Limitations of learning curve theory... 16.7 Summary... 16.9 APPENDIX vi