Cost Accounting

Course Code 2574
Marks: 100
Credits: 4 Class
Hours: 60
Course Title: COST ACCOUNTING
1. Cost Accounting and Cost Accountant: Cost Accounting: Definition, Differences with Financial
Accounting, Management Accounting; Cost-Benefit Approach in Decision Making; Different Costs
for Different Purposes, Organization Structure and the Cost Accountant; Cost Accounting as a
Profession and Professional Ethics.
2. An Introduction to Cost Terms and Purposes: Costs and Cost Terminology–Direct Costs and
Indirect Costs, Factors Affecting Direct/Indirect Cost Classifications; Cost-Behavior Patterns:
Variable Costs and Fixed Costs, Cost Drivers, Relevant Range; Relationships of Types of Costs,
Total Costs and Unit Costs; Types of Inventory in Manufacturing-, Merchandising-, and Service-
Sector Companies; Commonly Used Classifications of Manufacturing Costs (Inventoriable Costs and
Period Costs); Prime Costs and Conversion Costs, Different Meanings of Product Costs; A
Framework for Cost Accounting and Cost Management; Calculating the Cost of Products, Services,
and Other Cost Objects.
3. Materials: Direct and Indirect Materials, Procurements of Materials, Storage of Material. Materials
Record, Methods of Valuing Material Issues, Planning Material Requirements, Stock levels, EOQ,
Safety Stock, Materials Control, Stock Verification and Adjustment.
4. Labor: Measuring Labor Costs, Overtime Premium and Idle Time, Labor Cost Control, Method of
Remuneration, Incentive Plans, Calculation of labor cost, Recording of labor cost.
5. Overhead: Planning and Control of Overhead, Predetermined Manufacturing Overhead, Methods of
Determining Allocation Ratios, Applied Manufacturing Overhead, Over and Under Applied
Manufacturing Overhead, Administrative, Selling and Distribution Overhead, Accounting for
Overheads.
6. Cost Behaviour Analysis: Basic Assumptions and Examples of Cost Functions, Identifying Cost
Drivers, Cost Estimation Methods: Industrial Engineering Method, Conference Method, Account
Analysis Method, and Quantitative Analysis Method; Steps in Estimating a Cost Function Using
Quantitative Analysis, High-Low Method, Regression Analysis Method, Evaluating Cost Drivers of
the Estimated Cost Function, Nonlinear Cost Functions, Data Collection and Adjustment Issues.
7. Allocation of Support-Department Costs, Common Costs, and Revenues: Allocating Support
Department Costs Using the Single-Rate and Dual-Rate Methods, Budgeted Versus Actual Costs, and
the Choice of Allocation Base, Allocating Costs of Multiple Support Departments: Direct Method,
Step-Down Method, and Reciprocal Method; Allocating Common Costs: Stand-Alone Cost-
Allocation Method and Incremental Cost-Allocation Method; Cost Allocations and Contract
Disputes, Bundled Products and Revenue Allocation Methods.
8. Job Costing: Building-Block Concepts of Costing Systems, Job-Costing and Process-Costing
Systems, Job Costing: Evaluation and Implementation, Time Period Used to Compute Indirect-Cost
Rates, Normal Costing and Actual Costing, Normal Job-Costing System in Manufacturing, General
Ledger and Subsidiary Ledgers.
9. Activity-Based Costing: Broad Averaging and Its Consequences; Under-costing and Over-costing,
Product-Cost Cross-Subsidization, Simple Costing System Using a Single Indirect-Cost Pool,
Refining a Costing System–Activity-Based Costing (ABC) Systems, Implementing ABC; Comparing
Alternative Costing Systems.
10. Process Costing: Process Costing with No Beginning or Ending Work-in-Process (WIP) Inventory;
Process Costing with Zero Beginning and Some Ending WIP Inventory; Physical Units and
Equivalent Units, Calculation of Product Costs, Journal Entries; Process Costing with Some
Beginning and Some Ending WIP Inventory; Weighted-Average (WA) Method and First-In, First-
Out (FIFO) Method, Transferred-In Costs in Process Costing, Spoilage and Scrap, Normal and
Abnormal Spoilages, Procedure for Process Costing with Spoilage and Scrap.
Text Book:
1. Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan. Cost Accounting: A Managerial
Emphasis (Latest Edition). Upper Saddle River, New Jersey: Prentice Hall.
2. C. T. Horngren, G. L. Sundem, W. O. Stratton, J. Schatzberg, and D. Burgstahler. Introduction to
Management Accounting (Latest Edition). Upper Saddle River, New Jersey: Prentice Hall.
3. Ray H. Garrison, Eric W. Noreen, and Peter C. Brewer. Managerial Accounting (Latest Edition).
Boston: McGraw-Hill & Irwin.