Cost and management accounting

Cost and management accounting

Course objectives:

The objective of the course are too provides with in-depth knowledge of cost and management accounting in order to enable them the develop, arrange and classify cost information required for decision-making, profit maximizing systems design and control.

The course further aims at developing a sound base for higher study in accounting besides in practical knowledge required by the middle level managers to handles cost information independently.

Conceptual foundation

Cost accounting: meaning, objective, advantaged and limitations

Management accounting: meaning, objective and scope of management accounting, limitations of financial accounts, difference between cost and management accounting, advantages and limitations of management accounting.

Cost concept and classification of cost: cost classification: classification according to element of cost, functional classification, behaviors classification, cost segregating and method of segregation of cost: two point methods and least square method. classification for decision-making: relevant and irrelevant cost, avoidable and unavoidable cost, opportunity cost, marginal cost, differential and incremental cost, controllable and uncontrollable cost.

Accounting for inventory management and control

Reason and objectives for holding inventory

Inventory levels: re-order point, maximum level, minimum level, danger level, average stocks level, safety stock under certainty, two bin system

Just in time inventory: concept, advantages and limitations

Economic order quantity: model by using formula by trial and error approach including cash discount.

Inventory control system design: purchase procedures and control, purchase requisition, purchase order, materials receiving and handling.

Perpetual inventory system: (two bin card) and stock control through ABC analysis.

Accounting for labour

Labour cost: concept and types of wage, direct wages and indirect wages, piece wage and time wages, fringe benefits and salary in lieu of profit, allowances,

Accounting for pay roll, preparation of pay roll sheet.

Accounting for premium plan: premium bonus scheme- hales plan and rowan plan, tailor's different price rate system, and Gantt's task and bonus scheme.

Group bonus scheme: pressman's plan, and Scallion's plan

Accounting treatment of idle time-normal and abnormal

Labour turnover: cause and effects, cost of labour turnover, labour turnover cost measurement leaving cost, replacement cost, training and leaning cost.

Accounting for overhead cost

Overhead cost: meaning and classification of overhead cost

Accounting for overhead allocation, apportionment and absorption

Overhead allocation and apportionment: meaning, basis for apportionment

Apportionment of overhead: primary distribution, different between allocation and apportionment of overhead. 

Overhead cost absorption: meaning, method of absorption of overhead

Activity cost based costing (ABC): concept, limitation of traditional overhead cost absorption systems, allocation of overhead cost on activity based costing systems, allocation of overhead cost of basis of ABC system, determination of total cost and profit under traditional and ABC system, profitability analysis, activities based profitability analysis, limitations of activity based costing system.

Costing in difference situations

Job order costing: concept and accounting for job order costing

Contact costing: concept, preparation of contract tee's account. Work in progress account, contract account, treatment of plant in contact account, preparation of balance sheet.

Service costing: concept and scope of operating costing, unit of output costing in public sector. Transport service costing, hotel and restaurant service costing and hospital service costing, limitation of service costing.

Process costing: concept and uses, accounting for process account, process loss and accounting for loss, normal loss and abnormal loss, abnormal effective or abnormal gain, inter process profit calculation, reserved for unrealized profit.

Break-even analysis: under constant underlying situations excluding multi-product change on selling price, change on margin of safety

Cost accounting for planning and control

Responsibility accounting: definition of cost center, identification or responsibility and cost center, cost control ledgers, link between financial and cost books.

Reconciliation of profit between financial and cost account.

Standard costing: concept, preliminaries to established standard costing, difference between standard and budget, advantages and limitations'.

Variance analysis:

Martial variance: cost, price, usage, mix and yield variance

Labour variance: cost, efficiency, rate, mix, idle time and yield variance

Budgeting for planning: concept and importance of budget.

Types of budget: sales budget, material consumption and purchase budget, production budget, labour budget, overhead budget: manufacturing, administrative, selling and distribution, cash budget.

Flexible budgeting: concept and limitation of planning (static budget), importance of flexible budgeting, preparation of flexible budgeting for overhead cost control.

Overhead cost variance: capacity, effective and spending variances

Cost reduction

Cost reduction: concept, advantages and techniques, tools and techniques for cost reduction

Value engineering (analysis): concept, objective, importance, advances and techniques of value analysis.

Value added: concept of value added and preparation and sees of added statement.