Cost Accounting

Production and nonproduction costs.
 Elements of non production costs- administrative, selling,
distribution and finance.
 Elements of production cost- materials, labour and overheads
 Importance of the distinction between production and non
production costs when valuing output and inventories.
 Classification of cost - direct and indirect, fixed and variable,
stepped fixed and semi variable costs.
 Graphical presentation of types of cost behavior
 Use high/low analysis to separate the fixed and variable elements
of total costs
 Structure of linear functions and equations.
 Concept of cost objects, cost units and cost centres.
 Distinguish between cost, profit, investment and revenue
centres.
 Needs for information of cost, profit, investment and revenue
centre
Accounting for material
 Accounting for materials- Procedures for the ordering, receiving
and issuing of materials.
 Control procedures to minimise discrepancies and losses of
material.
 Material inventory account
 Identify, explain and calculate the costs of ordering and holding
inventory (including buffer inventory)
 Optimal reorder quantities (including discounts)
 Calculations to minimize inventory costs when inventory is
gradually replenishes
 Reorder levels
 Valuation of closing inventory and material issues using LIFO,
FIFO and average methods

Direct and Indirect Labour cost
 journal and ledger entries to record labour cost inputs and
outputs, remuneration methods- individual plans and group
incentive schemes
 Cost and causes of labour turnover, calculation of labour
efficiency, capacity and production volume ratios.

Treatment of direct and indirect expenses, production overhead
absorption rates
 Allocation, apportionment and absorption of production
overheads.
 Under and over absorption of overheads

Characteristics, concept, use of process costing
 Normal and abnormal losses and abnormal gains
 Calculate the cost per unit of process outputs, process accounts
involving normal and abnormal losses and abnormal gains
 Concept of equivalent units
 Prepare process accounts in different situations where work
remains incomplete.
 Distinguish between by-products and joint products.
 Value by-products and joint products at the point of separation
Absorption and marginal costing
 Importance and concept of contribution
 Calculate and reconcile profit or loss under absorption and
marginal costing
 Advantages and disadvantages of absorption and marginal
costing

Job and batch costing: Meaning, concept, characteristics and use
of job and batch costing
Alternative Cost Accounting principles
 Activity based costing (ABC), target costing, life cycle costing
and total quality management (TQM)
 Differentiate ABC, Target costing and life cycle costing from the
traditional costing techniques
Service/operation costing-
 Use of service/operation costing is appropriate.
 Carry out service cost analysis in simple service industry
situations