COST ACCOUNTING

Objective

This course gives fundamental elements of production, cost, budgeting, procedures of job order costing, process costing and standard costing. It enables the students to acquire skills necessary to interpret and analyze accounting data. This course builds upon the concepts and techniques to control cost driven activities. Distinction is made between Financial Accounting and Cost Accounting with respect to their integration.

Course Contents

1. The Management Concept and the Function of the Controller

1.1 The Management Concept
1.2 The Controller’s Participation in Planning and Control
1.3 The Cost Department
1.4 The Role of Cost Accounting

2. Cost Concepts and the Cost Accounting Information System

2.1 The Cost Concept
2.2 The Cost Accounting Information System
2.3 Classification of Costs
2.4 The flow of Costs in a Manufacturing Enterprise
2.5 Manufacturing Cost Accounting Cycle
2.6 Factory Ledger and General Ledger Accounting

3. Job Order Costing

3.1 Cost Systems and Cost Accumulation Procedures
3.2 Job Order Costing

4. Process Costing: Cost of Production Report

4.1 Process Cost Accumulation Procedures
4.2 The Cost of Production Report
4.3 Other Factors in Accounting for Lost Units
4.4 Addition of Materials

5. Process Costing: Average and FIFO Costing

5.1 Beginning Work in Process Inventories
5.2 Difficulties Encountered in Process Cost Accounting Procedures

6. By Product and Joint Product Costing

6.1 Difficulties in Costing By-Products and Joint Products
6.2 Definition of By-Products and Joint Products
6.3 Methods of Costing By-Products
6.4 Methods of Accounting the Joint Production Cost
6.5 An Analysis of joint Product Costing

7. Materials: Controlling and Costing

7.1 Procedures for Materials Procurement and Use
7.2 Materials Costing Methods
7.3 Transfer of Materials Cost to Finished Product
7.4 Costing Procedures for Scrap, Spoiled Goods and Defective Work
7.5 Summary of Materials Management

8. Materials: Quantitative Models for Planning and Control

8.1 Planning Materials Requirements
8.2 Materials Control

9. Labor: Controlling and Accounting for Costs

9.1 Productivity and Labor Costs
9.2 Incentive Wage Plans
9.3 Organization for Labor Cost Accounting and Control

10. Factory Overhead: Planned, Actual, and Applied; Variance Analysis

    10.1 The Nature of Factory Overhead
    10.2 The Use of a Predetermined Factory Overhead Rate
    10.3 Factors to be Considered in the Selection of Overhead Rates
    10.4 The Calculation of a Factory Overhead Rate
    10.5 Actual Factory Overhead Over or Under applied and Variance
    10.6 Analysis
    10.7 Changing Overhead Rates
    10.8 Summary of Factory Overhead

11. Standard Costing Setting Standards and Analyzing Variances

    11.1 Usefulness of Standard Costs
    11.2 Setting Standards
    11.3 Determining Standard Production
    11.4 Determining Standard Cost Variances
    11.5 Responsibility and Control of Variances

12. Standard Costing Incorporating Standards into the Accounting Records

12.1 Recording Standard Cost Variances in the Accounts
12.2 Standard Cost Accounting Procedures for Materials
12.3 Standard Cost Accounting Procedures for Labor
12.4 Standard Cost Accounting Procedures for Factory Overhead

Recommended Books

1. Horngern Charles T., Cost Account: A Managerial Emphasis, Prentice Hall, 1998.
2. Cashin and Polimini, Cost Accounting, McGraw Hill, 1995.
3. Usry Milton F., Cost Accounting planning and Control, South Western Publishing
   Co.(Ohio), (9TH Edition), 1996.