PAPER 8: COST ACCOUNTING

Syllabus

PAPER 8: COST ACCOUNTING

Syllabus Structure:

The syllabus comprises the following topics and study weightage:

ASSESSMENT STRATEGY

There will be written examination paper of three hours

OBJECTIVES

To provide an in depth study of the Cost Accounting Principles and Techniques for identification, analysis and classification of

Cost components to facilitate managerial decision making.

Learning aims

The syllabus aims to test the student’s ability to:

• Understand and explain the conceptual framework of Cost Accounting
• Explain the basic concepts and processes in determination of cost of products and services
• Understand the Cost Accounting Standards (CAS)
• Apply marginal costing in decision making
• Apply the concept of Standard Costing for variance analysis

Skill set required

Level B: Requiring the skill levels of knowledge, comprehension, application and analysis.

COST ACCOUNTING – INTRODUCTION TO COST ACCOUNTING [40 MARKS]

1. INTRODUCTION TO COST ACCOUNTING:
   1. Definition, Scope, objectives and significance of cost accounting, its relationship with financial

Accounting and management accounting

1. Cost Objects, Cost centers and cost units
2. Elements of cost
3. Classification of costs
4. COST ASCERTAINMENT - ELEMENTS OF COST:
   1. Material Costs:
      1. Procurement of Materials,
      2. Inventory Management and Control,
      3. Inventory Accounting & Valuation
      4. Physical Verification, treatment of losses
      5. Scrap, spoilage, defectives and wastage.
   2. Employee Costs:
      1. Time keeping, Time booking and payroll,
      2. Labour Turnover, Overtime and idle time
      3. Principles and methods of remuneration and incentive schemes
      4. Employee cost reporting and measurement of efficiency.

1. Direct Expenses
2. Overheads:
   1. Collection, classification and apportionment and allocation of overheads
   2. Absorption and treatment of over or under absorption of overheads
   3. Reporting of overhead costs
3. COST ACCOUNTING STANDARDS (Basic Understanding only) (CAS 1 to CAS 24)
4. COST BOOK KEEPING:
   1. Cost Accounting Records, Ledgers and Cost Statements
   2. Items excluded from cost and normal and abnormal items/cost
   3. Integral accounts
   4. Reconciliation of cost accounting records with financial accounts
   5. Infrastructure, Educational, Healthcare and Port services
5. METHODS OF COSTING:
   1. Job Costing
   2. Batch Costing
   3. Contract Costing
   4. Process Costing – Normal and abnormal losses, equivalent production, Joint and By Products.
   5. Operating Costing or Service Costing – Transport, Hotel and Hospital
6. COST ACCOUNTING TECHNIQUES: (Basic Understanding only)

1. Marginal Costing
   1. Meaning of Marginal Cost and Marginal Costing
   2. Absorption Costing vs. Marginal Costing
   3. Break-even analysis
   4. Margin of safety
   5. Application of Marginal Costing for decision making (simple problems only)
2. Standard Costing & Variance Analysis
   1. Concept of standard cost and standard costing
   2. Advantages and limitations
   3. Computation of variances relating to material and labour costs only
3. Budget and Budgetary Control (simple problems only)
   1. Concepts, Types of Budgets
   2. Budgetary Control Vs. Standard Costing
   3. Advantages and limitations
   4. Preparation of Budgets (simple problems only)