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ACCA Paper F2 Management accounting Essential text British library cataloguinginpublication data A catalogue record for this book is available from the British Library. Published by: Kaplan Publishing UK Unit 2 The Business Centre Molly Millars Lane Wokingham Berkshire RG41 2QZ ISBN 978 1 84710 535 6 © Kaplan Financial Limited, 2008 Printed and bound in Great Britain. Acknowledgements We are grateful to the Association of Chartered Certified Accountants and the Chartered Institute of Management Accountants for permisssion to reproduce past examination questions. The answers have been prepared by Kaplan Publishing. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of Kaplan Publishing. ii KAPLAN PUBLISHING Contents Page Chapter 1 The nature and purpose of management accounting Chapter 2 Types of cost and cost behaviour 15 Chapter 3 Business mathematics 41 Chapter 4 Ordering and accounting for inventory 57 Chapter 5 Order quantities and reorder levels 71 Chapter 6 Accounting for labour 89 Chapter 7 Accounting for overheads 109 Chapter 8 Marginal and absorption costing 139 Chapter 9 Relevant costing 165 Chapter 10 Dealing with limiting factors 181 Chapter 11 Job, batch and process costing 201 Chapter 12 Service and operation costing 239 Chapter 13 Budgeting 251 Chapter 14 Standard costing 275 KAPLAN PUBLISHING 1 iii iv KAPLAN PUBLISHING chapter Intro Paper Introduction v How to Use the Materials These Kaplan Publishing learning materials have been carefully designed to make your learning experience as easy as possible and to give you the best chances of success in your examinations. The product range contains a number of features to help you in the study process. They include: (1) Detailed study guide and syllabus objectives (2) Description of the examination (3) Study skills and revision guidance (4) Complete text or essential text (5) Question practice The sections on the study guide, the syllabus objectives, the examination and study skills should all be read before you commence your studies. They are designed to familiarise you with the nature and content of the examination and give you tips on how to best to approach your learning. The complete text or essential text comprises the main learning materials and gives guidance as to the importance of topics and where other related resources can be found. Each chapter includes: vi • The learning objectives contained in each chapter, which have been carefully mapped to the examining body's own syllabus learning objectives or outcomes. You should use these to check you have a clear understanding of all the topics on which you might be assessed in the examination. • The chapter diagram provides a visual reference for the content in the chapter, giving an overview of the topics and how they link together. KAPLAN PUBLISHING • The content for each topic area commences with a brief explanation or definition to put the topic into context before covering the topic in detai