CHINHOYI UNIVERSITY OF TECHNOLOGY

ACCOUNTING SCIENCE AND FINANCE DEPARTMENT

+ P. Bag 7724, CHINHOYI, ZIMBABWE
( +263 67 22203-5 ext 216
2 +263 67 28957
Website: www.cut.ac.zw
E-mail: inzero@cut.ac.zw/ignzero@yahoo.co.uk

The Chairpersons Office

COURSE LECTURER: Mr Chengeramanga I,

ichengeramanga@cut.ac.zw,0777478238/0735394339,Ext :
139. Office; block 11-07

Course Tile and Code

Cost and management Accounting –CUAC 104

Time Allocation: 4 hours per week, an additional 2hours will be reserved for tutorials.

Rationale
This course represents the first of the cost and management Accounting courses,
assumes no prior knowledge of cost and management accounting .

Purpose
To develop knowledge and understanding of the underlying principles and concepts
cost and management accounting and technical proficiency in the use of costing
techniques for preparation of basic statements for decision making.

The course introduces students to the fundamentals of costing principles, concepts

and techniques of management and cost accounting.

The course outline covers costing definitions, cost analysis and cost ascertainment,
materials accounting labour accounting, overhead costing, other costing methods
(marginal and absorption/total costing, planning and control concepts, introduction to
budgetary controls and standard costing.

Main Capabilities
Upon successful completion of the course the course the students should be able to:

I. Analyse and ascertain product costs.

II. Prepare and analyse operating statements and reports.
III. Demonstrate the preparation of elementary budgets and analyse budget
variances.
IV. Analyse cost-volume-profit analysis in decision making.
V. Prepare basic costing statement.
Methods of Teaching
Each section of the course outline will be thoroughly discussed (taught) in the lecture,
with comprehensive examples articulated to the students. Discussions and further
illustrations are going to be extensively done in tutorials.

Students Assessments
1. Course work comprise of 3 tests, with 30 percent weight of the final mark.
Questions in the tests will cover all the pertinent aspects of the course covered
up to the time of the test, and will serve as mock exams, in preparation for the
final exam. Tests will not overlap.
2. Final exam constitute 70% of the final mark, will exam all the pertinent aspect
of the course.
3. The final mark will be a summation of course work ad the exam mark.
4. The lecturer will provide course evaluation forms to students, once completed,
to be submitted to the chairman before the students write the exam. The
chairman will provide feedback to the lecturer.

1.0 COURSE CONTENT

1.1 Introduction

1.1.1 Different fields of accounting – Financial Accounting and

Management Accounting
1.1.2 Place and function of Cost Accounting
1.1.3 Function of different fields of Accounting
1.1.4 Cost Accounting and Management Accounting
1.1.5 Inter-related areas of CMA – cost analysis and cost
ascertainment, planning and control, and decision-making and
performance appraisal

1.2 Cost analysis and cost ascertainment

1.2.1 Cost analysis – primary classification of costs

1.2.1.1Definitions of cost, cost object, cost unit and cost centre
1.2.1.2Cost centre direct and indirect costs
1.2.1.3Cost unit direct and indirect costs
1.2.1.4Manufacturing costs

1.2.2 Cost ascertainment

1.2.2.1Materials

a) Acquisition – purchasing procedure, economic order

quantity, maximum stock level, and reorder level,
lead-time and safety stock.
b) Receipt and storage of materials
c) Issuing of stock
d) Pricing issues and stock valuation – FIFO, , average
cost
e)
 1.2.2.2Labour

a) Labour records
b) Labour costing
c) Fixed salary remuneration method
d) Time based wages
e) Output based wages (incentive schemes) – piecework
schemes, bonus schemes and profit sharing
f) Labour turnover

1.2.2.3Overheads

a) Classification of overheads – manufacturing and no-

manufacturing
b) Allocation of overheads to departments/cost centres
c) Calculation of overhead absorption rates
d) Absorption of overheads by products
e) Treatment of over/under absorbed overheads

1.2.2.4Costing methods

a) Absorption costing
b) Specific order costing – job costing, batch costing and
contract costing
c) Continuous operation costing – process costing,
service costing and joint product costing

1.3 Planning and Control

1.3.1 Planning and Control Concepts

1.3.2 Cost Behaviour and Volume of Activity
1.3.2.1Variable and fixed costs
1.3.2.2Semi-variable costs: finding fixed and variable elements –
high/low method, scatter graph and simple regression (or
least squares method)

1.3.3 Introduction to Budgeting and Budgetary Control

1.3.3.1Definition of budgeting
1.3.3.2Benefits of budgeting
1.3.3.3Elementary fixed budgets

a) Master budget
b) Operating budget – budgeted income statement and
its supporting budgets
 c) Financial budget – capital budget, cash budget,
budgeted balance sheet and budgeted cash flow
statement

1.3.3.4Elementary flexible budgets and budgetary control

1.3.4 Standard Costing

1.3.4.1Definition of standard cost

1.3.4.2Definition of standard costing
1.3.4.3Purpose of standard costing
1.3.4.4Setting standards for direct materials, direct labour and
overheads
1.3.4.5Elementary variance analysis:

a) Material – total, purchase price, and usage/quantity

variances
b) Labour – total, rate and efficiency variances
c) Variable overhead – total, expenditure/rate and
efficiency variances
d) Fixed overhead – total, expenditure and volume
variances
e) Sales – total, price and quantity/volume variances

1.4 Decision Making

1.4.1 Marginal Costing

1.4.1.1Definition of marginal costing
1.4.1.2Uses of marginal costing
1.4.1.3Marginal costing operating statement
1.4.1.4Marginal costing versus absorption costing

1.4.2 Cost-Volume – Profit (CVP) Analysis

1.4.2.1Definition of CVP analysis

1.4.2.2Uses of CVP analysis
1.4.2.3Break-even point
1.4.2.4Break-even graph
1.4.2.5Marginal income graph
1.4.2.6Margin of safety
1.4.2.7Marginal income ratio
1.4.2.8Level of sales and target profit
2.0 COURSE TEXT (S) RECOMMENDED READING

Lucey T 2009 Costing. 4th (or latest) edition.

DP Publications, London.

Izhar Riad 2001 Accounting,costing and management.

Oxford University press

Manash Dutta 2004 Cost accounting: principles and practice.

Dehli : Pearson education

Drury ,Colin 2003 cost and management accounting: an introduction

Australia: Thomson

Drury Collin 2004 management and cost accounting

London: Thompson Learning

Drury Collin 2008 management and cost accounting

London: cenagage learning

Le roux G. S 2003 basic principles of cost and management

Accounting.Lansdowne: Juta