Dushyant Mahadik

 Introductions
 Course Outline
 Why Cost Accounting
 Assignment
Sr Title Readings
1 Introduction to Cost and Management Chapter 1 HDFRI / Chapter 15 AHM /
Accounting Chapters 1, 13 Arora
2 Relation of Costs with Volume Chapter 3 HDFRI / Chapter 16 AHM /
Chapter 17 Arora
3 Types of costs Chapter 2 HDFRI / Chapters 2, 3 Arora
4 Allocation of Overheads and Activity Chapter 5 HDFRI / Chapters 17, 18 AHM
Based Costing / Chapter 4 Arora
5 Planning and Budgeting Chapter 6 HDFRI / Chapters 19, 24
AHM / Chapter 18 Arora
6 Management Control Chapters 7, 8 HDFRI / Chapters 20, 21
AHM / Chapter 19 Arora
Sr Title Readings
7 Introduction to Financial and Regulatory Chapter 1 RN / Chapter 1 AHM
Accounting
8 Measuring and reporting assets Chapters 5,6,7 RN / Chapters 2, 7 AHM
9 Measuring and reporting liabilities and Chapters 9, 10 RN / Chapters 8, 9 AHM
equity
10 Measuring Income and Expenses Chapters 3, 4 RN / Chapters 3, 6 AHM
11 Financial Statement Analysis Chapter 11 RN / Chapter 13 AHM
 Class Tests = 10 marks
 3 un-announced tests to be conducted, best 2
will be considered for 5 marks each
 Mid-term = 30 marks
 Assignments = 10 marks
 1) Business Model presentation
 2) Report on overhead allocations case
 Financial assets
in return for Cash
Invested

Investors holding Real

financial Corporation Assets
instruments

Returns:
• Dividends, Buy- 6
back, Interest, etc
Management Accounting
Internal use
Flexible structure of information
Reporting based on need
Historical plus estimates of future
Non-monatary information can be
included
Approximations are many
Realistic
Continuously updated/available on next
day of period end
Financial Accounting
Outside users
Fixed form. Assets = Liabilities + OE
Quarterly and annual reporting
Historical values only
Primarily monetary information
Fewer approximations
Conservative
Available after a delay
 Measurement of economic performance of
organization
 Product-wise performance
 Pricing
 Planning / Budgeting
 Performance comparisons
 Functions in an organization
 Payments in cost-plus contracts
Item Std Quantity Std Price Total Cost
Material X 120 sq cm 0.05 / sq cm 6.0
Part Y 6 nos 2.5 / piece 15.0
Part Z 1 no 24.5 / piece 24.5
45.5
Process Std Time Std Rate Total Cost
Form material X 0.60 12.5 7.5
Assemble with Z 0.20 12.5 2.5
Fitting of Y 0.05 9.0 0.45
Testing and packing 0.15 9.0 1.35
1.00 11.8
Overheads @17.7 per hour 17.7
Total standard cost 75.0
(per unit)
 • Medicines
Materials • Consumables

• Doctors, nurses, counselors, etc.

Labour • Support functions (lab technicians, housekeeping,
etc.) and supervisors

Other • Utilities – air, water, elevator, etc.

expenses • Rent

• Office and administration costs

Overheads • Distribution network
11
 Below is some data taken from payroll of
radiology department along with usage of x-
ray films. Estimate the characteristics of labor
costs, using visual fit and high-low methods :
Month No of X-rays Films Used (packs) Technician Hours
A 300 2.5 180
M 240 1.9 140
J 400 3.5 230
J 340 3.1 190
A 180 1.4 110
S 600 5.4 320
Total 2060 17.8 1170
 6
Fixed Costs
5 Total Costs
Revenue
4

2
20000
FC =

0
0 1 2 3 4
Break-even 5

Point
 P 17.40 Arora – Problem 17.2 (vii)
 P 17.44 Arora – Problem 17.5, 17.6
 P. 17.50 Arora – Problem 17.12
 P. 17.48 Arora – Problem 17.10
 What is a Business Model ?
 Identify a business around you, accessible to
your group members
 Collect data about revenue, operating costs,
fixed costs, etc.
 Calculate break-even point
 Cost
Centre

Investment Responsib Revenue

Centre ility Centre

Profit
Centre
 Relation to Output
 Fixed Costs
 Variable Costs
 Semi-fixed Costs
 Traceability
 Direct Costs
 Indirect Costs
 List down the various costs occurring at a
beverage vending machine
 Relation to Output
 Fixed Costs
 Variable Costs
 Semi-fixed Costs
 Traceability
 Direct Costs
 Indirect Costs
 Sunk Costs
 Opportunity Costs
 Controllable Costs
 Marginal Costs
 Budgeted Costs
 Discretionary / Mandatory Spending
 Period Costs
 Joint Costs
 Cost Objects