CIMA P1 - Management Accounting
The Chartered Institute of Management Accountants (CIMA) comprehensively covers major topics of contribution in operational level through the fundamentals of Management Accounting in P1. It contains simple costing knowledge – being able to identify cost classifications such as material, labour and overheads while also being able to identify costs by behaviour such as fixed, variable and so on. It’s one of the more exciting papers as it builds your knowledge of Management Accounting and the various concepts involved in it.
Students will learn the need for costing is to be done and what it is used for, including appropriate costing methods and techniques and where digital costing might be used. Also the focus is on how budgets are prepared and employed across the organisation, the effect these have, and how techniques are applied to ensure thorough short term decision making, against risk and uncertainty, by using appropriate risk management tools. Students are required to perform the reconciliation of marginal and absorption costing profits and know the usefulness of each method.
The P1 syllabus is divided into multiple layers to ensure students understand the concepts and relate to the logical flow of theories. Although scheduling and dividing timings are personal choices of students, the percentages stated by CIMA also highlights the proportion of study time each component requires from students.
The below percentage division may be considered a point of reference and your study can revolve around it accordingly –
- 30%-Cost Accounting for decision and control
- 25%-Budgeting and budgetary control
- 30% -Short term commercial decision making
- 15%- Risk and uncertainty in the short term
P1 Exam Advice-
The examination format is computer based and may be scheduled on demand in any of the 5000 Pearson VUE Centers. Overall the examination time consumed is 2 hours and have multiple range of question format. Students have to answer 60 questions in 90 minutes.
Recommended tips -
- Cover the whole syllabus.
- Take more than one full mock exam in exam conditions.
- Spend the final two weeks before the exam taking mock exams and practice questions.
- Identify weak areas of the P1 syllabus and revised them.
This seeks to address the following pertinent questions:
- What are reasons for calculating costs?
- What types of costs are appropriate for a particular purpose and why?
- Examine the basic building blocks of costing and how they apply to different types of organisations and operating contexts (e.g., manufacturing and service sectors). How has the digital world affected the nature of these building blocks of costing? Investigate how costs are traced, classified, accumulated, allocated, apportioned and absorbed to arrive at the costs of a product, service or other cost object. Calculate the costs of products or services using various costing methods.
- Determine which costing methods are appropriate and why?
- Why do organisations prepare budgets?
- In what ways are the different rationales for preparing budgets compatible with each other?
- How do organisations get the most out the budgeting process? What is the process by which budgets are prepared?
- What types of budgets are required by organisations?
- What data do they use and where do they get the data from?
- How are those budgets prepared and presented?
- What technologies are available for improving the quality of the budgets?
- What is budgetary control?
- Describe and discuss how and why the budgetary control system provides feedback and feedforward to the organisation.
- What are the behavioural impacts of budgetary control and how are they managed?
- Describe the types of short-term decisions organisations make and the circumstances that give rise to them.
- What do these short-term decisions seek to achieve?
- The emphasis is on both revenue and costs. What are the objectives and underlying concepts that are used to guide short-term decision-making and why?
- Distinguish between those concepts of revenue, costs and information from other concepts. Use data (financial and non-financial) and the appropriate concepts and techniques to support decision-making to achieve organisational objectives of value creation and preservation. What types of risks and uncertainties do organisations face when preparing and implementing budgets and when making short-term decisions?
- How are those risks and uncertainties identified, assessed and managed?