COST AND MANAGEMENT ACCOUNTING

Paper Code: 
BCP 213
Credits: 
6
Contact Hours: 
90.00
Max. Marks: 
100.00
Objective: 

Course Outcomes (COs):

Learning outcome (at course level)

Learning and teaching strategies

Assessment Strategies

CO 51:Differentiate between Cost Accounting and Management Accounting and examining thoroughly the elements of cost

CO 52: Analyze the material cost and its Procurement procedures

CO 53:Critically examines overheads and employee cost.

CO 54:Compute batch cost, activity cost and contract cost and ABC

CO 55:Appraise process costing and standard costing

CO 56:Examine budgetary control system and marginal costing as a tool of managerial planning and control; develop an ability to prepare various types of budgets.

Interactive Lectures, Discussion, Tutorials, assignments. Self-learning assignments, Effective questions, giving tasks, Solving numerical problems

 

Class test, Semester end examinations, Quiz, Solving problems in tutorials, Assignments, Individual projects

 

10.00
Unit I: 
  • Overview of Cost and Management Accounting: (i) Introduction to Cost and Management Accounting: a. Objectives and Scope of Cost and Management Accounting. b. The users of Cost and Management accounting information, Functions of management accounting. c. Role of cost accounting department in an organisation and its relation with other departments. d. Installation of Costing System. e. Relationship of Cost Accounting, Financial Accounting, Management Accounting and Financial Management. f. Cost terms and Concepts. g. Cost Reduction and Cost Control h. Elements of Costs. i Cost behaviour pattern, separating the components of fixed, variable, semi-variable and step costs. j Methods of Costing, Techniques of Costing. k Digital Costing. (ii) Elements of Cost and preparation of Cost Sheets: a. Functional classification and ascertainment of cost. b. Preparation of Cost Sheets for manufacturing sector and for Service sector.
  • Ascertainment of Cost and Cost Accounting System: (i) Material Cost: a. Introduction to procurement procedures. Valuation of receipts, issue and closing stock of Material, Stock verification. b. Material requirement analysis through digital costing including Government e-Marketplace (GeM). Introduction to Costing through Enterprise Resource Planning (ERP). Process of tender and quotation. c. Inventory control: - Techniques of fixing level of stocks- minimum, maximum, re-order point, safety stock, determination of optimum stock level. - Determination of Optimum Order quantity- Economic Order Quantity (EOQ). - Techniques of Inventory control- ABC Analysis, Fast, Slow moving and Non moving (FSN), High, Medium, Low (HML), Vital, Essential, Desirable (VED), Just-in-Time (JIT)- Stock taking and perpetual inventory system, use of inventory control ratios, Digital Inventory control. d. Treatment of Normal/Abnormal Losses w.r.t. waste, scrap, spoilage, defective, obsolescence.

 

18.00
Unit II: 
  • Employee Cost: a. Introduction to Attendance and Payroll procedures. b. Elements of wages- Basic pay, Dearness Allowance, Overtime, Bonus, Holiday and leave wages, Allowances and perquisites. c. Employee Cost Control. d. Employee Turnover- Methods of calculating employee turnover, causes of employee turnover, effects of employee turnover. e. Remuneration systems and incentive schemes- Premium Bonus Method (Halsey Plan and Rowan Plan).
  • Direct Expenses: Identification of direct expenses with the main product or service and its treatment.
  • Overheads: a Functional analysis- Factory, Administration, Selling, Distribution, Research and Development. b Behavioural analysis- Fixed Variable and Semi-Variable. c Allocation and Apportionment of overheads using Absorption Costing Method. d Factory Overheads- Primary and secondary distribution. e. Administration Overheads- Method of allocation to cost centres or products. f. Selling & Distribution Overheads- Analysis and absorption of the expenses in products/ customers, impact of marketing strategies, cost effectiveness of various methods of sales promotion. g. Treatment of Research and development cost in cost accounting.

 

24.00
Unit III: 
  • Concepts of Activity Based Costing (ABC).
  • Integration of cost and financial data: a. recording of financial data and its segregation. b. Introduction to Non-integrated and Integrated Accounting system. c. Items included in cost accounts only but financial accounts and vice versa. d. Reconciliation of profit as per Cost and Financial Accounts (under Non-Integrated Accounting System).
  • Methods of Costing (i) Single Output/ Unit Costing. (ii) Job Costing: Job cost cards and databases, collecting direct costs of each job, attributing overheads to jobs, Application of job costing. (iii) Batch Costing: Determination of optimum batch quantity, Ascertainment of cost for a batch, Preparation of batch cost sheet, Treatment of spoiled and defective work.

 

24.00
Unit IV: 
  • Process/ Operation Costing: a. Process cost recording, Process loss, abnormal gains and losses, Equivalent units of production, Inter-process profit, Valuation of work in process. b. Joint Products-Apportionment of joint costs, Methods of apportioning joint cost over joint products. c. By-Products-Methods of apportioning joint costs over by-products, treatment of By-Product cost.
  • Costing of Service Sectors: Determination of Costs and Prices of services.
  • Standard Costing: a. setting up of Standards, Types of Standards, Standard Costing as method of performance measurement. b. Calculation and Reconciliation of Material Cost, Labour cost, Variable Overhead, Fixed Overhead.

 

14.00
Unit V: 
  • Marginal Costing: a. Basic concepts of marginal costing, Contribution margin, breakeven analysis, Break–even and profit volume charts, Contribution to sales ratio, Margin of Safety, Angle of Incidence, Cost-Volume Profit Analysis (CVP). b. Determination of Cost of a product/ service under marginal costing method, determination of cost of finished goods, work-in progress. c. Comparison of Marginal costing with absorption costing method Reconciliation of profit under both the methods. d. Short term decision making: - Make or buy decision - Discontinuation decision - Multiproduct break-even analysis - Limiting factor (key factor)
  • Budget and Budgetary Control: a. Meaning of Budget, Essentials of Budget, Budget Manual, Budget setting process, Preparation of Budget and monitoring procedures. b. The use of budget in planning and control. c. Flexible budget, Preparation of Functional budget for operating and non-operating functions Cash budget, Master budget. d. Introduction to Principal/ Key budget factor, Zero Based Budgeting (ZBB), Performance budget, Control ratios and Budget variances. e. Budgets and motivation. f. Feedback and Feed forward controlling in budgeting.

 

Essential Readings: 

Study Material Published by Institute of Chartered Accountants of India

References: 

• Saxena, Vashishtha Cost Accounting, S Chand, New Delhi
• M.N. Arora, Cost Accounting Principles and Practice, Vikas Publication, New Delhi)
• Arun Kumar, Scanner, Suchitra Prakashan(P) Ltd
E-RESOURCES:
https://www.icai.org/post.html?post_id=17759

JOURNALS:
The Chartered Accountant Journal /ICAI Student Journal

Academic Year: 
2023-2024
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