CIMAP2-Performance Management Area B Self Study Guide Session Component Learning Outcomes (duration)

1 (Wk 1, 2 hrs) Introduction to P2 Familiarising yourself with the syllabus and what the exam is all about. Area B of P2 is all about costing and analysis for competitive advantage.

Study Guidance/Tips
Please note that the session duration time given for each area is a rough guide based on % of P2 paper syllabus weightings. Research has shown that students who study at minimum of 11 hours per week are more likely to pass. These timings must be taken into account with other personal commitments such as work, family time, recreation etc. Obviously the more hours students can dedicate to studying the higher their chance of success. Please use this as guidance rather than as an exact science of how to study, and please feel free to change it to suit your requirements. Please email any feedback to studysupport@cimaglobal.com

CIMA Technical Articles

Review the P1 syllabus to ensure there are no knowledge gaps, especially if you have exemptions.

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CIMAP2-Performance Management Area B Self Study Guide SECTION B: COST PLANNING AND ANALYSIS FOR COMPETITIVE ADVANTAGE (30%)- Recommended study time- 50 hours over 4-5 weeks Session Component Learning Outcomes Study Guidance/Tips CIMA Technical (duration) Articles
2 (Wk 1, 3.8 hours) 1(a) Compare and contrast value analysis and functional cost analysis. 1. Know the definition of value analysis and functional cost analysis. 2. Understand the different types of value analysis and its purpose. 3. Know how both these types of analysis could be implemented and understand the importance of each.

CS.com chapter 7 1(a) Exam questions from past papers: Sept 11-Q6d Nov 11-Q3

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CIMAP2-Performance Management Area B Self Study Guide Session Component Learning Outcomes (duration)
3 (Wk 1, 3.8 hours) 1(b) Evaluate the impacts of just-in-time production, the theory of constraints and total quality management on efficiency, inventory and cost.

Study Guidance/Tips

CIMA Technical Articles

Supply chain management .

CS.com chapter 7

1. Know the definition of just-in-time production, the advantages/disadvantages and how this impacts on modern manufacturing techniques. 2. Understand the steps involved in the theory of constraints and the role of throughput accounting. 3. Understand the principles of total quality management and how this has impacted on business success. 4. How would the above affect reporting on costs compared to traditional manufacturing processes? What are the benefits/limitations of above? TOP TIP: Try to find an industry example where TQM production techniques are implemented and one without for comparison.

1(b) Exam questions from past papers: Nov-10-Q3 Mar-11-Q2 May-12-Q4 Nov-12-Q5

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CIMAP2-Performance Management Area B Self Study Guide Session Component Learning Outcomes (duration)
4 (Wk 1, 3.8 hours) 1(c) Explain the concepts of continuous improvement and Kaizen costing that are central to total quality management.

Study Guidance/Tips
1. Know the definition and principles of Kaizen costing. 2. Understand how the techniques and concepts differ from traditional costing approaches.

CIMA Technical Articles

What is Kaizen costing?

CS.com chapter 7 1(c) Exam questions from past papers: Sept-10-Q2 May-11-Q3 Sept-11-Q3 Nov-11-Q2a Mar-12-Q2 5 (Wk 2, 3.8 hours) 1(d) Prepare cost of quality reports. CS.com chapter 7 1. Have the ability to prepare cost reports based on the cost of implementing quality techniques and their cost savings impact and then comparing this to the cost of conforming to current standards.

1(d) Exam questions from past papers: Nov-10-Q2 Mar-11-Q5 Nov-11-Q7b Sept-12-Q4 Nov-12-Q4 6 1(e) Apply learning curves to estimate 1. Know the definition of a learning curve and how it (Wk 2, time and cost for new products and is presented on graphical format. 3.8 hours) services. 2. Know the formula and understand how to calculate different learning curve rates. CS.com chapter 6 3. Understand in what real-life scenarios learning curve formula could be applied.

Learning curve, and question and answer example.

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CIMAP2-Performance Management Area B Self Study Guide Session Component Learning Outcomes (duration)
1(e) Exam questions from past papers: May-10-Q1 Sept-10-Q5 Nov-10-Q1 Mar-11-Q1 Nov-11-Q1a, Q1b Mar-12-Q1 May-12-Q1 Sept-12-Q1 Nov-12-Q1 Mar-13-Q1 May-13-Q2 7 (Wk 2, 3.8 hours)

Study Guidance/Tips

CIMA Technical Articles

1(f) Apply the techniques of activitybased management in identifying cost drivers/activities. CS.com chapter 8

1. Before you begin this learning outcome you will need to have an understanding of activity based costing. 2. Know the definition of activity based management. 3. Understand the outputs from an activity based management information system. 4. Know the advantages/disadvantages of using activity based management. 5. Know the problems with implementing activity based costing and management principles. 1. Know the definition of business process reengineering. 2. Have the ability to explain how investigating business process and highlighting inefficiencies can help reduce costs and improve quality.

Activity-based costing Activity-based management

8 (Wk 2, 3.8 hours)

1(g) Explain how process re-engineering can be used to eliminate non-value adding activities and reduce activity costs. CS.com chapter 7

TOP TIP: How are business processes developed in your company? Are they documented and analysed often?
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CIMAP2-Performance Management Area B Self Study Guide Session Component Learning Outcomes (duration)
1(g) Exam questions from past papers: Nov-11-Q3 Mar-12-Q3 May-13-Q6c 9 1(h) Explain how target costs can be (Wk 3, derived from target prices and the 3.8 hours) relationship between target costs and standard costs. CS.com chapter 9 1(h) Exam questions from past papers: Sept-10-Q5 10 (Wk 3, 3.8 hours) May-11-Q3 May-12-Q5 1(i) Discuss the concept of life cycle costing and how life cycle costs interact with marketing strategies at each stage of the life cycle.

Study Guidance/Tips

CIMA Technical Articles

1. Know the definition of target costing. 2. Understand how the target cost is developed at the planning stage of a new product and how it is used for existing products. 3. Be able to compare standard and target costing methods and know the advantages/disadvantages of each.

1. Understand what is meant by the term life-cycle costing. 2. Understand the concept of the product life cycle and this will help you understand how the life cycle costs interact. 3. Understand the benefits of life cycle costing. TOP TIP: Think about how life cycles are extended. Apple I Phones are generally released in the USA first to build awareness then, introduced gradually in other countries. Can you think of other company examples?
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CS.com chapter 9

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CIMAP2-Performance Management Area B Self Study Guide Session Component Learning Outcomes (duration)
1(i) Exam questions from past papers: May-10-Q2 Sept-10-Q6 May-11-Q2 Sept-11-Q2 Sept-12-Q5 11 1(j) Discuss the concept of the value 1. (Wk 3, chain and the management of 3.8 hours) contribution/profit generated throughout 2. the chain. CS.com chapter 8

Study Guidance/Tips

CIMA Technical Articles

Have an understanding of the value chain and in particular Michael Porters model. Understand the difference between the primary and support activities within the chain and how they affect each other. 3. Understand how the value chain can be used to develop competitive strategies.

Porters value chain image

1(j) Exam questions from past papers: Mar-13-Q2 12 (Wk 3, 3.8 hours)

1(k) Discuss gain sharing arrangements whereby contractors and customers benefit if contract targets for cost, delivery etc. are beaten. CS.com chapter 9

1. Understand what is meant by gain sharing arrangements and the components it must possess. 2. Understand the benefits gain sharing can provide to both parties.

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CIMAP2-Performance Management Area B Self Study Guide Session Component Learning Outcomes (duration)
13 (Wk 4, 3.8 hours) 1(l) Analyse direct customer profitability and extend this analysis to distribution channel profitability through the application of activity-based costing ideas.

Study Guidance/Tips
1. Know the definition of customer profitability. 2. Understand why this is useful in different industries, it is particularly important for service industries e.g. banks. 3. Understand what is meant by distribution channel profitability. 4. Explain how the above information could be used to implement an activity based costing system. TOP TIP: Think of the different channels that companies now use to sell. There is more movement towards online shopping and use of apps on smart phones. How is this impacting on distribution channel profitability?

CIMA Technical Articles

CS.com chapter 8

1(l) Exam questions from past papers: Sept-10-Q3 Nov-10-Q5 Mar-13-Q3 May-13-Q1 14 1(m) Apply Pareto analysis as a (Wk 4, convenient technique for identifying key 3.8 hours) elements of data in presenting the results of other analyses, such as activity-based profitability calculations. CS.com chapter 9

1. Understand what is meant by Pareto analysis and Pareto analysis in what circumstances it could be used. 2. Understand how it can be used with other management reports for example 80% of revenue generated by 20% of customers.

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CIMAP2-Performance Management Area B Self Study Guide Revision Day:

1. Attempt at least two mock papers to timed conditions before the exam including reading time of 20 minutes (Total 3 hrs and 20 minutes to complete). Review the examiners answers and post exam guides after you have finished the mock exam. Nov-12 exam May-12 exam Examiners answers Post exam guide Examiners answers Post exam guide Study tips from tutors and students

Maths skills Business English

OTHER STUDY RESOURCES:

Find all examiners suggested answers here Post exam guides CIMA Publishing Velocity-Student e-magazine Financial Management magazine Chat to other students on CIMAsphere-discussion boards for management level .

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