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102. Management Accounting-I (Introduction to Cost Accounting) |
Course Objectives
This course is designed to fulfill the following objectives. These are to:
a. introduce cost accounting as a branch of accounting with some distinct purposes, [accounting of manufacturing enterprises]
b. explain various cost concepts & methods of cost determination,
c. describe the recording and summarization of different elements of cost of production; and
d. give elementary ideas about two basic methods of cost determination and cost sheet preparation.
Cost Concepts & Cost Statementss-Weight-20%
102.01: Nature of Cost Accounting
Accounting and its branches – Business and accounting – Financial Accounting – Cost Accounting – Management Accounting – Cost Accounting, its definition and objectives. Business functions and cost accounting – cost determination methods and Techniques-Benefits of having a costing system – Installation of a costing system – Cost control – Cost Reduction – Cost Management – The Institute of Cost and Management Accountants of Bangladesh. Professional Ethics.
102.02: Cost Concepts and their Classification
Cost – Expenses – Loss – Cost classification basis and terms – Natural classification – Behavioral classification – classification on the basis of tractability to the product – Association with the product – Functional classification of cost – Managerial classification. Cost sheet / statement of cost of production – its relationship with the Income Statement and Balance sheet.
102.03: Element of Cost of Production : Materials
Materials Costing -Weight-20%
Materials Management & Control
Concept of Materials – objectives of materials management and control – purchasing & Receiving procedures – Ordering level and Ordering size – store organization – Documentation – Material Cost – Inventory System – shortages / overages – uncertainly and safety stock – Accounting for material losses – physical verification of stock – stock control in Advanced Manufacturing Environment – Just-in-time concept. MRPS
Materials Accounting
Inventory System – Periodic System – Perpetual System – General Ledger and Subsidiary Ledger – Maintenance of subsidiary records – Documents necessary – Stores Ledger A/C/ Stores Ledger card – Methods of Pricing issues – FIFO – LIFO – Weighted / Moving Average – Valuation of closing / inventory for Balance sheet – Pricing of returns – selection of pricing Method. Recording. [Documents]
Labor Costing -Weight-20%
102.04: Element of Cost of Production : Labor
Labor Control and Methods of Remuneration
Introduction – Direct Vs. Indirect Labor – Permanent / Temporary labor – Types or workers – Master Roll – Job Evaluation – Merit Rating – Learning curve – Work Study – Time Study – Motion Study – Labor Performance Report – Labor Turnover.
Payroll Accounting : Labor Remuneration & Accounting
Principles of Remuneration – Piece Rate – Time Rate – Incentive wage plan – Sharing Scheme – Group Bonus – Incentive Scheme for indirect labor – Administration of the wages Incentive scheme – Profit sharing – copartner ship.
Accounting for Labor – Clock Card – Time Ticket – Idle time – Overtime – Payroll sheet – Distribution of labor cost – Recording of labor cost. [Documents]
Overhead Costing -Weight-20%
102.05: Direct Expenses
Introduction – Nature of direct expenses – Accounting for direct expenses.
103.06: Overhead : Classification, Distribution & Control
Definition – Functional classification – Behavioral classification – Methods of segregation of semi-variable cost: fixed and variable – Need for classification of costs units fixed and variable – Depreciation & Obsolescence – Interest on capital – accumulation of overhead costs. [Documents]
102.07: Factory / Manufacturing Overhead :
Plan for accounting of manufacturing overhead – Allocation of overheads – Apportionment of overhead – Absorption of factory overhead – Methods of absorption – Machive Hour Rate – Labour Hour Rate – Over / under absorption of overheads – selection of absorption rates – capacity levels: Normal capacity – capacity costs – capacity ratios – Accounting for specific items of production overheads. Allocation of service department coats to production departments.
102.08: Non – Manufacturing Overheads General & Administrative and Selling and Distribution overhead: distribution and control of administrative overhead – selling and distribution overheads – Treatment of course specific items of expenses.
102.09: Activity – Based Costing:
Traditional Product costing and modern manufacturing environment – ABC – its meaning – Cost Drivers – Types of cost drives – Selection of cost drivers – comparing ABC with conventional costing systems – Benefits of ABC criticisms of ABC.
Costing Methods-Weight - 20%
102.10: Job and Batch Costing
Nature of job costing – Job Cost sheet and job ledger – Recording costs on Jobs – Recording completed jobs & Batch costing – Economic Batch quantity – Back Flush costing. Treatment of spoilage, scrap and defective units.
102.11: Process costing: [Elementary]
Basic features of a process system – objectives of a process cost system – Characteristics of a Process cost system – comparison with Job costing – process cost flow and accumulation – Statement of cost of production and of determination of Equivalent Units.
Text Books :
1. Cost Accounting, Planning & Control - Usry and Carter
2. Cost Accounting - Polimeni, et.al
Reference Book
1. Management Accounting - Drury
2. Cost Accounting - Dansby. R. L. and M. D. Lawrence
3. Cost Accounting - Rayburn, L. G.
4. Cost Accounting - Lal, J.
5. Principles and Practice of Cost Accounting - Bhattacharyya, A. K.
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