Cost & Managerial Accountancy

M1 - FUNDAM
NDAME
ENTALS
ALS OF COST & MANAGE
NAGEM
MENT ACCO
CCOUNTING
INTR
NTRODUCTI
DUCTION  Iden
dentify and explain classi ssificat
ication
ion of coscost and
This
This cou
course is des
design
igned to make the the stude
studen nts fam
familiar
the
their behaviouviour
wit
with the
the appl
applica
ication of basic metho
methods and techniqu niques
 Appl
Apply material cost costing
ing and contontrol
rols
of cos
cost and management accou ccounting. The
The cou
course deals
 Classi
ssify, calculate and evalua luate labou
bour cost and
wit
with the
the cos
cost concep
conceptsts,, cost behaviou
viour cos
cost
its effic
efficiiency
classi
ssifica
ication and cost flows, materia rial, labou
bour, fac
factory
 Appl
Apply manufacturing turing oveoverhead
headss cost
costing
ing and
ove
overhead cost
costing,
ing, margina
rginall cost
costing,
ing, sta
standard
dard cost
costing
ing
cont
control
rols
and varia
riance analysis.
 Analyse and calcula ulate produroductct cos
cost under der
OBJECTI
CTIVE different cost
costiing metho thods i.e., procerocess costing,
sting,
To provid
rovide the
the stude
studennts wit
with an appr
appropria
riate job ord
order cost
costiing, batch and service cost costing
ing
knowl
nowledge
edge of Cos
Cost and Manageme ement Accou
ccounting to  Under
dersta
stand absorp orption and margina rginal costing
sting
enable the
them to: metho
thods;
 Underdersta
stand basic concep conceptt of Management  Prepar
epare incincome sta statement by absorp orption and
Accou
ccounting, margina
rginal cost costing metho thods and per perform
 Appl
Apply cos
cost metho
thods and techniques for preparing
paring reconcil
conciliation of profrofits under both the the methothods
and presen
senting info
inforrmation for deci
decission-m
ion-making  Make use
use of stastandard cost
costing;
ing;
and cost cont
control
rol.  Calcula
ulate direirect materiarial, dire
irect labou
bour, varia
riable,
fixed overhead varia riances and sales variance and
LEA
LEARNING OUTC
UTCOMES
ascertain thethe reasons for varia riance
nces
On com
completion of this
this cours
course, stude
studen
nts wil
will be able to:
 Under
dersta
stand the int inter-re
r-relationsh
onshipip between een
 Under
dersta
stand the
the conce
ncept and scopcope of cos cost
varia
riances.
accou
ccounting

INDI
NDICAT
CATIVE GRID
PART CONTENT WEIGHTAGE
THE NATURE, SOURCE AND PURPOSE OF MANAGEMENT INFORMATION
1 Introdroduction
ion to costing and performance measurement ent
2 Introdroduction
ion to management accounting
A 20%
3 Sources of dat data
4 Cost classifica ication
5 Cost behavio viour
COST ACCOUNTING SYSTEM
6 Acc
Accounting for
B 20%
Materials
7 Acc
Accounting for Labour
8 Acc
COST Accounting for TECHNIQUES
ACCOUNTING Ove
Overhead
heads AND METHODS
9 Absorptio ptionn a n d m a rg ina
inal costing
C 10 Job
Job, Batch and Service ice costing 40%
11 Proc
rocess costing
12 Proc
rocess costing, joint prod roducts and
and by-
by-pro
produc
ducts
STANDARD COSTING
D 13 Standard 20%
costing
14 Variance analy alysis TOTAL 100%
Note: The
The weight
ighta
age sho
shown agains inst each
each section indindicates, study time require
ired for the
the topics in tha
that section. This
This
weight
ighta
age does not necessa ssarily speci
peciffy the
the numb
umber of marks to be alloc
lloca
ated to tha
that section in the examination.
DETA
ETAILED
LED CON
CONTENTS
PAR
PART – A  Defi
Definitions
THE NATURE
NATURE,, SOURCE AND
AND PUR
PURPOSE  The
The changin
nging rol
role of man
management
ment accou
ccounting
OF MANA
ANAGEMENT INFOR
FORMATI
ATION  Dat
Data and infor
nformmation
1. Introdu
Introducction
ion to costing and performa
ormance  The
The purpose of management infor nform
mation
meas
easure
urement  Sou
Source
rces and categori
gories of inf
information
 Fina
inancia
ncial, Cos
Cost and Managementment Accou
ccounting  ICMA and its rol
role in management
ment accou
ccounting
Concep
Conceptts 3. Sources
ources of data
 The
The Concep
Conceptts of Cos
Cost  Types
pes of Data
 Cos
Cost Classi
ssifica
ication  Sou
Source
rces of Data
 Cos
Cost Classifica
ication for Inve
nventory Valua
luation  Seconda
condaryry Data
and Prof
rofit Meas
easure
urement  Sampling
 Cos
Cost Classi
ssifica
ication for Cont
Control  Sampling Methodthod
 Per
Perform
ormance Measur surement
 Shareholder der Value and Envir
Environm
onmental and 4. Cost class
lassiification
Socia
Social Con
Concerns  Total Prodroduct
uct/Service cost
costss
 Dire
irect Cost
Costss and Indirect Cost
Costss
2. Introdu
Introduc
ction
ion to Managem
anagement Accou
Account ntiing
 Func
Functtiona
ional Cost
Costss
 What is management accou ccounting
 Fixed Costs
Costs,, Vari
ariable Cost
Costss, semi-va
i-varia
riable &
1
 Step fixed
xed  Margina
rginal Cost and Margi rginal Cos
Costing
Cos
Cost  Difference between een margina
rginal and
 Prod
roduction and Non-Pon-Production Cost
Costss absorp
orption cost
costing
ing
 Cos
Cost Code
Codess  Princip
rinciple of Margina
rginal Cost
Costing
ing
 Cos
Cost Units
nits,, Cos
Cost Obje
bjective
ives and  Margina
rginal Costing
sting and Absorporption Cost
Costiing
Res
Respons
onsibil
ibility and the
the calculation of prof rofit and inventory
Centre under
der bot
both the
the methothods
s  Reconci
Reconcilling Prof
rofit
 Margina
rginal Costing
sting versus
sus Absorp
orption Cost
Costing
ing
5. Cost Beh
Behavi
avior
 Cos
Cost behavior and
and levels of activit
ivity 10.
10. Job
Job, Bat
Batch and Service
 Grap
Graph hica
ical repr
epresentation of different types
pes c o s ti n g
of cost
costss  Cost
Costing
ing Method
 Cos
Cost behaviors patte
tterns  Job Cost
Costing
ing
 Det
Determining the the fixed
xed and variable  Batch Cost
Costiing
elements of semi-vai-variable cost
costss and High  Service Cost
Costing
and Low point method thod
11.
11. Proce
rocesss costi
sting
 Linea
inearr Equ
Equations and Gra
Graphs
 The
The basics of proce
rocess cost
costing
ing
 Losse
sses in pro
process cost
costing
ing
PAR
PART - B  Losse
sses wit
with scra
crap value
lue
Cos
Cost Account
ountiing Syste
stems  Losse
sses wit
with a disposal cos
cost
6. Accou
Account
ntiing for Materials
erials  Valuing
luing closing work in progre
rogress
 What is inve
inventory cont
control  Valuing
luing opening
pening work in proce rocess:
ss: FIFO
FIFO
 Orde
Ordering,
ring, Rec
Receipt and Issue
Issue of metho
Raw Materia rials(Re
ls(Re-O
-Orrder Level, Maxiaximum
mum d
level, minimu
inimum m level dangenger level)  Valuing
luing opening work in prog rogress
 Stora
orage of Raw Materials weig
eighte
hted average cost method
thod
 Inve
nventory Cont
Control Levels
12.
12. Proce
rocesss costi
sting, join
joint produc
oducts and
 Econom
Economic Orde
Orderr Quantity Mode
Modell
by- produc
products
 ABC Cont
Control
rols for inve
inventory)
 Joint prod
roduct
ucts and by- products
 Accou
ccounting for Materia rial Cost
Costss
 Deal
Dealing with comm
common on cost
costss
 Inve
nventory Valualuation
 Joint prod
roduct
ucts in proce
rocess accou
ccounts
 FIFO
FIFO (Firs
irst in First out)
ut)
 Accou
ccounting for by products
 LIFO
LIFO(Last in First out)ut)
 Metho
thods of Alloc
lloca
ation of joint cos
cost
 AVCO (Av(Average CostCost))
7. Accou
Account
ntiing for Labour
our PAR
PART - D
 Classi
ssifica
ication of Labor Direct and Stand
andard
ind
indirect labor Cos
Costing
 Measu
easuring
ring labour activit
ivity
13.
13. Sta
Standard
 Remu
Remun neration metho thods(time-ba
-based
c o s ti n g
syste
stems,
ms, piecework syste stems and ind
individu
vidua
al
 Standard
dard cost
costing
ing((Explain stan
standard
dard
and group ince
incentive schemes)
costing
sting using
using examples)
 Treatm
eatmeent and calcula ulation of Ove
Overtime
 Prepar eparation of sta
standar
dards
and idle time
 Uses of standastandarrd cost
costing
ing
 Recor
Recordding labou
bour cost
costss
 Othe
ther aspects of sta
standard
dard
 Labou
bour turnov
turnove er
cost
costinging(P
(Pu
urpose and Limitations of sta
standard
dard
 Accou
ccounting for labou
bour cost
costss
cos
costing)
8. Accou
Account
ntiing for Ove
Overheadeads
14.
14. Varia
riance
 Classi
ssifica
ication and coll
colle
ection of Ove
Overheads
eads
analy
alysis
 Ove
Overheadead absorpt rption rates and basis
 Varia
riance
nces
of absorp
orption
 Dire irect materia rial variariance
nces(Total, Price
 Ove
Overheadead alloc
lloca
ation
and usa
usage variance nce)
 Ove
Overheadead appor
pporttionme
ionmentnt
 Direirect labor varia
riances(total,
tal, r at e
and reapp
eapport
ortionm
ionment
and effic
efficiiency var
variance
nce)
 Ove
Overheadead absorp
orption
 Varia
riable ove
overhea head
 Blanket absorp
orption rates and
varia
riance
nces(total, expen penditure
ture and effic
fficiiency
depar
partme
tmental absorporption rates
variance
nce)
 Ove
Over and under der absorp
orption of overheads
eads
 Fixed ove overhe
rhead varia riances (total, tal,
PAR
PART - C expen
penditurture, volum
volume e, capaci
apacitty and eff
efficie
iciency
Cos
Cost Account
ountiing Tec
Techniques and Method
hods varia
riance)
 Reas
Reasons for cos cost variancences
9. Absorp
bsorpttion
ion and Marginal costing  Sales varianc ances(Price and Volume lume Varianriancces)
 Absorp
orption Cos
Cost  Oper
perating statements
 Deriving
Deriving actua tual datdata from sta standard
dard
cos
cost det
details and varia riances
 Inter-re
r-relationshi
ships between een variance
nces