Theoverall concept of the F5 syllabus is that it builds from topics that you havelearnt at F2, gives you more management accounting techniques and focuses onthe core fundamentals of performance management. It is important to rememberthat this is a performance management paper and not a management accountingpaper.
Youwill be expected to manipulate numerical information using techniques learntand also, perhaps more importantly, you will need to interpret that informationin the context of a scenario. Knowledge provided by the analytical review ofthis information is key for managers to make decisions for businesses and thisis the focus of this paper.
Thefollowing are some of the key skills that are essential for passing the F5exam:
1.Understanding the reasoning behind calculations and how these calculations willbe useful to management:
Questionsthat are testing a management accounting technique will always try to make thelink between the technique and its use as a performance management tool.
Youmust make sure that you have revised the syllabus thoroughly and have theknowledge required of these tools.
Youmust make sure that you are applying your knowledge to the information in thequestion and using evidence from the scenario in your answer.
Youmust practise the written elements of questions in full, as this is where theexaminer will test your understanding of the scenario and performancemanagement implications of the question.
2.Managing your time effectively and identifying easy marks available:
Theexaminer has previously pointed out that there will be easy marks available inthe exam and students who answer these parts of questions usually perform well.
Studentswho do not manage their time and miss easy marks are making it much harder forthemselves to pass the exam.
Youmust make sure that you are using your reading time effectively to identify anyparts of questions that you can easily tackle and plan the order in which youwill answer questions in the exam.
3.Reading the question and understanding the requirement:
Youmust read the question very carefully and identify the instructional verbsused, remember there may be more than one thing to answer within eachrequirement. You must use the mark allocation to work out how much depth youneed to go into in your answer.
Makesure that you are answering the question set not the one that you would like toanswer.
Commonpitfalls pointed out by the Paper F5 examiner include:
Studentsfailure to make the step up from F2 to F5 - this is due to a lack of ability tointerpret the calculations performed with reference to the scenario given.
Poorinterpretation of data - this would be due to lack of planning andunderstanding the requirements of the question.
Poortechnical knowledge.
Makesure that you are always thinking about these key skills during your revisionand that each time you practice a question you are thoroughly reviewing youranswer afterwards to identify if you need to work on any of these areas.
Advanced costing method
Chapter learning objectives
Upon completion of this chapter you will be able to:
explain what is meant by the term cost driver identify appropriate cost drivers under activity-based costing (ABC) calculate costs per driver and per unit using (ABC) compare ABC and traditional methods of overhead absorption based on production units, labour hours or machine hours.
explain the implications of switching to ABC on pricing, performance management and decision making.
explain what is meant by the term ‘target cost’ in both manufacturing and service industries.
derive a target cost in both manufacturing and service industries.
explain the difficulties of using target costing in service industries? explain the implications of using target costing on pricing, cost control and performance management.
describe the target cost gap.
suggest how a target cost gap might be closed.
explain what is meant by the term ‘life-cycle costing’ in a manufacturing industry identify the costs involved at different stages of the life-cycle.
explain the implications of life-cycle costing on pricing, performance management and decision making.
describe the process of back-flush accounting and contrast with traditional process accounting.
explain, for a manufacturing business, the implications of back-flush accounting on performance management *uate the decision to switch to back-flush accounting from traditional process control for a manufacturing business.
explain throughput accounting and the throughput accounting ratio (TPAR), and calculate and interpret, a TPAR.
suggest how a TPAR could be improved.
