COST ACCOUNTING

Cost classification                                                                                                     

·         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 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.   

Accounting for Labour:                                                                                          

·         Direct and Indirect Labour cost journal and ledger entries to record labour cost inputs outputs, remuneration methods-  time based systems, piecework systems, and individual  plans and group incentive schemes Cost  and  causes  of  labour  turnover,  calculation  of  labour efficiency, capacity and production volume ratios. Entries in Labour Account 

Accounting for overheads:                                                                                   

·         Treatment of direct and indirect expenses, production overhead absorption rates Allocation, apportionment and absorption of production overheads. Journal and Ledger entries for manufacturing overheads. Under and over absorption of overheads

Process costing:                                                                                                   

·         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                                           

Cost Accounting Methods                                                                                         

·         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