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Module Specifications

Archived Version 2010 - 2011

Module Title Management Accounting - Decision Making
Module Code AC320
School DCUBS

Online Module Resources

Module Co-ordinatorDr Ruth MattimoeOffice NumberQ238
Level 3 Credit Rating 5
Pre-requisite None
Co-requisite None
Module Aims
  1. Understand the role of accounting information in the decision-making processes of an organisation
  2. Be able to prepare, interpret and communicate accounting information for decision-making purposes
  3. Assess the effect of organisational structure on the consequences of management decisions

Learning Outcomes

On successful completion of this module, students will be able to:

  • Interpret the nature of costs and cost behaviour.
  • Explain the main models of decision-making under conditions of certainty and uncertainty.
  • Apply principles of relevant costing and various calculative techniques to analyse decision situations.
  • Evaluate the various possible outcomes to decision situations and make recommendations to manage.
  • Construct and interpret linear programming solutions by the graphical method for decisions involving resources.
  • Compute and appraise the return on investment, residual income and economic value added performance measures to evaluate the performance of divisionalised companies and divisional management.
  • Describe inter-divisional transfers and apply simple transfer pricing rules.
  • Critique various topics on the course using professional and academic literature

Indicative Time Allowances
Lectures 24
Tutorials 10
Laboratories 0
Seminars 0
Independent Learning Time 41

Total 75
Assume that a 5 credit module load represents approximately 75 hours' work, which includes all teaching, in-course assignments, laboratory work or other specialised training and an estimated private learning time associated with the module.

Indicative Syllabus

Decision Making in the Organisational Context

Models of the decision-making process. The role of accounting information in the decision-making process. Types of decisions in manufacturing, service and not-for-profit organisations. 

Cost Behaviour


Importance for decision making. Linear and non-linear cost behaviour patterns. Approaches to estimating cost functions, including statistical and non-statistical approaches. The learning curve, including the learning curve formula.

Relevant Cost Analysis


Relevant and irrelevant costs, opportunity costs, sunk costs. Marginal costing in the mananagement decision process. Preparation and interpretation of information for specific types of decisions, for example make or buy, sell or process further, continue or close down, pricing and special order decisions. Derivation of long run costs for strategic decision-making. Qualitative factors in decision making. An introduction to current issues in decision making.

Product mix decisions when capacity constraints exist


Meaning of capacity constraints/limiting factors and computation of product mix decisions for single limiting factor situations, using the simple contribution per unit of the limiting factor rule. Application and preparation of information using linear programming (graphical approach only). 



External pricing strategies and decisions: cost-based, market-based, special orders.

Uncertainty and Decision Making

The role of decision models. Sensitivity, decision-tree and probability analyses. Expected monetary value and utility value. Buying perfect and imperfect information. 

Decentralisation and Performance Evaluation

Reasons for decentralisation. Cost centres, profit centres and investment centres- including behavioural issues in the application of performance measures. An introduction to measurement of divisional performance, strengths and weaknesses of various measures. An introduction to the issue of transfer pricing (including relevance to international operations).

Continuous Assessment20% Examination Weight80%
Indicative Reading List


Seal, W.B., Garrison, R.H. and Noreen, E. Management Accounting, 3e, London: McGraw Hill

Other Resources:

Drury, Colin 2008, Management and Cost Accounting, 7th Ed., South Western Cengage Learning

Clarke, Peter, 2008, Management Accounting, Chartered Accountants Ireland

CIMA, Financial Management magazine

HBS Press, Harvard Business Review

Programme or List of Programmes
AFBA in Accounting & Finance